7/31/2019 HP CEO Meg Whitman Company-wide Video Message Explaining the Future of Bill Hewlett and David Packards C

1/2

Hi.

TodayHPannouncedsecondquarterresults,andonceagain,wedeliveredonwhatwesaidwewoulddo.Ourpublicly-statedguidancefornon-GAAPdilutedearningspersharewas88to91cents.Andwedelivered98cents,beatingouroutlookby7centsashareonrevenuesof$30.7billion.Ithankallofyouforyourhardworkanddedication.Thisisajourney.Wererebuildingcredibilityonequarterattime,andtodothat,weneedtoconsistentlydeliveronwhatwesay.

Youareattheheartofourresults.Withoutyourefforts,HPcannotthrive.ButHPsperformanceisstillnotwhereitneedstobe.Ourbusinessisstilldeclining.Year-over-year,non-GAAPEPSwasdown21percentandrevenuesweredown3percent.WehavealotofworkaheadofustogetHPbackontrackandthatbeginswithexecutingagainstthestrategywevetalkedaboutinrecentmonths.

Ourfoundationisinfrastructure,PCsandprinting,servers,storageandnetworking.ThisisadifferentiatingstrengthforHPandonewecanbeproudof.

HPSoftwareextendsandstrengthensthatfoundation,solvingcustomerchallengeslikemanaging,securingandautomatingtheinformationflowacrossthedatacenter.

Servicesmakesitallworktogetherforthecustomer,ensuringtheirtechnologyismeetingtheirneeds.

Andfinally,wecombineourinfrastructure,softwareandservicesintocomprehensivesolutionsthatdeliverenormouscustomervalue.

Movingforwardwerealigningourpowerfulcollectionofassetstocaptureleadershipinthreestrategicareas:Cloud,security,andinformationoptimization.

Buttodothiswemustinvestandwecannotaffordtowait.

AswediscussedinQ1,ourcostsareexpandingwhileourrevenuesdecline,andthishasbeenhappeningfortoolong.Thestrategicrealignmentweannouncedlastquarterwasagoodfirststepinaddressingthisproblembybeginningtheprocessofremovingcomplexity,simplifyingouroperations,andreducingcosts.Andt

odayweretakingthenextstepinthisjourneywiththeannouncementofamulti-yearrestructuringthatwilltoucheverypartofHPandcreateamorestreamlinedcompany.

Weretakingapre-taxchargeofapproximately$1.7billiontobeincludedinourFY12GAAPresults,aswellasafurthermulti-yearpre-taxchargeof$1.8billion.Bytheendof2014,weexpecttoreducetheworkforceby27,000positionsthroughacombinationoflayoffsandearlyretirement.Andweexpecttogeneraterun-ratecostsavingsofapproximately$3to3.5billion.Thesearedifficultactions.Workforcereductionsarenteasyandwedonttakethemlightly.Theyadverselyimpactpeopleslivesandaretoughonthecompany,ourcultureandyou.Weretryingourbesttomitigatetheimpactasmuchaswecan.Wevelimitedhiringtotryandreducethenumberofpeopleaffected.Forthosepositionswehaveopen,were

givingtopconsiderationtointernalcandidates.WereofferinganupgradedearlyretirementpackageintheUS,andexpandingourcareertransitionandplanningservicestobettersupportemployees.

IknowHPhasbeenthroughalotinrecentyearsandthisisanotherdoseofchange.Butinthiscase,itsabsolutelyessentialforthelong-termhealthofourcompany.Letmesharealittleperspective.

Attheendof2009,wereportedaworkforceofabout304,000.Attheendof2010,wehadalmost325,000employeesandattheend2011,thatnumberhadballooned

7/31/2019 HP CEO Meg Whitman Company-wide Video Message Explaining the Future of Bill Hewlett and David Packards C

2/2

tonearly350,000.Overthatsameperiod,wesawyear-over-yearrevenuegrowthof10percentin2010,of1percentin2011andsofarin2012,revenueshavebeendeclining.

Werestrugglingunderourownweight.AndwevegottorestoreahealthybalanceinordertoreturnHPtoitspositionasagrowingthrivinginnovatingindustryleader.Thatswhatthisisallabout.Andtheworkforcereductionisonlyonepieceofacomprehensiveeffort.Weseealotofopportunitytoremovecomplexity,streamlineandreducecostsinanumberofareasacrossHP.

Iknowthatmanyofyourememberthecostreductionofyearspast,likedatacenterconsolidationandcentralizingfunctionssuchasHR,Legal,FinanceandIT.Whatweredoingnowisdifferent.Weregoingafterthebigcostbucketsandfundamentalbusinessprocessreengineering.Thisincludesoptimizingthesupplychain,reducingthenumberofSKUsandplatforms,continuingtohoneourrealestatestrategy,simplifyingourgo-to-market,improvingbusinessprocesses,andimplementingconsistentpricingandpromotionstodriveend-userdemandprofitably.Itsharderworkwithgreaterpotentialpayoff.

Anotherdifferencefromyearspastiswhatweplantodowiththesavings.Themajorityofsavingsthistimearoundwillbeinvestedinthebusiness.Wellbeinvestingtodriveleadershipinthethreestrategicpillarscloud,securityandinformationoptimization.Andineachofourbusinesses,wellmakeinvestmentstostayaheadofcustomerexpectationsandmarkettrends.

InourPCandPrintingbusinesses,wellbefocusedondesign,engineering,quality,andgeneratingdemandanddesirewithourcustomers.

InESSN,wellinvesttodriveR&Dandinnovationinourcorebusinessesofservers,storageandnetworking.Togethertheycreateaconvergedinfrastructurethatisthefoundationfortopcustomerinitiativessuchascloud,bigdataanalyticsandsocialmedia.

InSoftware,wellbeinvestingtospeeddevelopmentacrossSecurity,InformationandManagementInfrastructureforbothon-premiseITandinthecloudwithakeyfocusonsoftware-as-a-serviceofferings.ThiswillincludetheextensionofVerticaandAutonomyacrossourentireportfolio.

AndinServices,wellimproveprocessesandbuild-outcapabilitiesincloud,securityandinformation.Wellalsobestrengtheningourindustrypractices,aswellasourservicequalityandinnovation.

Additionally,wellinvestinourpeopleinbettertraining,bettercareerdevelopmentandbettertoolsandsupport.

Intimesofchange,itseasytolosefocus,waitingtoseewhathappensnext.Wecantletthathappen.Thisagreatorganization,fullofincrediblepeoplewhoareresilient,committedandwhocareaboutourcustomersandourcompany.Imaskingallofyoutopleasekeepdrivingforward.Closeeverydeal.Leavenothingonthetable.Weneedthatnowmorethanever.

Imconfidentinthedecisionswevemadeandthedirectionweregoing.Together,wewilldefinethefutureofHPandofourindustry.

WellbeholdingournextallemployeebroadcastonJune18thandIlookforwardtospeakingwithyouthenandansweringyourquestions.

Thankyou.