HP Reports Fourth Quarter 2006 Results

More information on HP's quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/hpinfo/investor/.

HP's Q4 FY06 earnings conference call is accessible via an audio webcast at www.hp.com/hpinfo/investor/financials/quarters/2006/q4webcast.html.

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Oct. 31, 2006, HP revenue totaled $91.7 billion. More information about HP is available at www.hp.com.

Use of non-GAAP financial information

To supplement HP's consolidated condensed financial statements presented on a GAAP basis, HP provides non-GAAP operating profit, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted earnings per share and gross cash. HP also provides forecasts of non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results for this quarter, fiscal year-to-date, and prior periods is included in the tables below. In addition, an explanation of the ways in which HP management uses these non-GAAP measures to evaluate its business, the substance behind HP management's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP management compensates for those limitations, and the substantive reasons why HP management believes that these non-GAAP measures provide useful information to investors is included under "Use of Non-GAAP Financial Measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating profit, operating margin, net income, diluted earnings per share, or cash and cash equivalents prepared in accordance with GAAP.

Forward-looking statements

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, charges, earnings or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including execution of any restructuring plans; any statements concerning the expected development, performance or market share relating to products or services; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic and geopolitical trends and events; execution and performance of contracts by suppliers, customers and partners; employee management issues; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; assumptions related to pension and other post-retirement costs; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to the risks described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2005, HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2006 and other reports filed after that report. As in prior years, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts in HP's Form 10-K for the fiscal year ended October 31, 2006. In particular, determining HP's actual tax balances and provisions as of October 31, 2006 and for the fiscal year then ended requires extensive internal and external review of tax data (including consolidating and reviewing the tax provisions of numerous domestic and foreign entities) which is being completed in the ordinary course of preparing HP's Form 10-K. HP assumes no obligation and does not intend to update these forward-looking statements.

Note to editors: HP news releases are available via RSS feed at www.hp.com/hpinfo/rss.html.

(C) 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.
                (In millions except per share amounts)

                                            Three months ended
                                     October 31, July 31,  October 31,
                                         2006       2006       2005
                                     ----------- --------- -----------

Net revenue                            $ 24,555  $ 21,890    $ 22,913

Costs and expenses(a):
  Cost of sales                          18,593    16,472      17,532
  Research and development                  870       920         859
  Selling, general and
   administrative                         2,886     2,830       2,786
  Amortization of purchased
   intangible assets                        153       153         136
  Restructuring charges                     152         5       1,565
  In-process research and
   development charges                        -         -           2
  Pension curtailment gain                    -         -        (199)
                                     ----------- --------- -----------
     Total costs and expenses            22,654    20,380      22,681
                                     ----------- --------- -----------

Earnings from operations                  1,901     1,510         232

Interest and other, net                     190       221            132
Gains  on  investments                                                  14                  7                    14
Dispute  settlement                                                        -                  -                      3
                                                                          -----------  ---------  -----------

Earnings  before  taxes                                          2,105          1,738                  381

Provision  for  (benefit  from)
  taxes(b)                                                                      408              363                  (35)
                                                                          -----------  ---------  -----------

Net  earnings                                                      $    1,697    $    1,375        $        416
                                                                          ===========  =========  ===========

Net  earnings  per  share:
      Basic                                                              $      0.62    $      0.50        $      0.15
      Diluted                                                          $      0.60    $      0.48        $      0.14

Cash  dividends  declared  per  share            $            -    $      0.16        $            -

Weighted-average  shares  used  to  compute  net  earnings  per  share:
    Basic                                                                      2,730          2,768              2,850
    Diluted                                                                  2,816          2,839              2,908

(a)  Stock-based  compensation  expense  included  under  SFAS  123(R)  was  as
      Cost  of  sales                                              $          37    $          35        $            -
      Research  and  development                                    20                17                      -
      Selling,  general  and
        administrative                                                      84                75                      -
                                                                          -----------  ---------  -----------
          Total  costs  and  expenses                    $        141    $        127        $            -

(b)  Tax  benefit  from  stock-based
  compensation                                                    $        (40)  $        (38)      $            -

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