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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001012870-02-000588.txt : 20020414
<SEC-HEADER>0001012870-02-000588.hdr.sgml : 20020414
ACCESSION NUMBER:		0001012870-02-000588
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20020213
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
ITEM INFORMATION:		
FILED AS OF DATE:		20020214

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HEWLETT PACKARD CO
		CENTRAL INDEX KEY:			0000047217
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER & OFFICE EQUIPMENT [3570]
		IRS NUMBER:				941081436
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-04423
		FILM NUMBER:		02543780

	BUSINESS ADDRESS:	
		STREET 1:		3000 HANOVER ST
		CITY:			PALO ALTO
		STATE:			CA
		ZIP:			94304
		BUSINESS PHONE:		4158571501

	MAIL ADDRESS:	
		STREET 1:		3000 HANOVER ST
		STREET 2:		MS 20BL
		CITY:			PALO ALTO
		STATE:			CA
		ZIP:			94304
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d8k.txt
<DESCRIPTION>FORM 8-K
<TEXT>
<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004

                                    FORM 8-K

                                 CURRENT REPORT
                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                                February 13, 2002
                ------------------------------------------------
                Date of Report (Date of Earliest Event Reported)

                             Hewlett-Packard Company
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                   1-4423                     94-1081436
- --------------------------------------------------------------------------------
(State or other jurisdiction   (Commission File Number)       (I.R.S. Employer
      of incorporation)                                      Identification No.)


                    3000 Hanover Street, Palo Alto, CA 94304
               ---------------------------------------------------
               (Address of principal executive offices) (Zip code)


                                 (650) 857-1501
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

================================================================================

<PAGE>

ITEM 5.        OTHER EVENTS.

               On February 13, 2002, Hewlett-Packard Company ("HP") issued a
               press release relating to its fiscal 2002 first quarter and 2002
               guidance. The press release, entitled "HP Reports First Quarter
               Results; 5% Sequential Revenue Growth; 1.2 ppt Sequential Pro
               Forma Gross Margin Increase; Pro Forma EPS of $0.29" dated
               February 13, 2002 is attached hereto as Exhibit 99.1 and
               incorporated by reference herein.

ITEM 7.        FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit 99.1   Press release dated February 13, 2002 entitled "HP Reports First
               Quarter Results; 5% Sequential Revenue Growth; 1.2 ppt Sequential
               Pro Forma Gross Margin Increase; Pro Forma EPS of $0.29."

Exhibit 99.2   Scripts prepared for use by Stephen J. Pavlovich, Carleton S.
               Fiorina and Robert P. Wayman for conference call at 1:30 p.m.
               PST, February 13, 2002, discussing fiscal 2002 first quarter and
               2002 guidance.

ITEM 9.        REGULATION FD DISCLOSURE.

               On February 13, 2002 at 1:30 p.m. PST, in connection with HP's
               issuance of the foregoing press release, HP held a conference
               call and webcast to discuss the contents of the press release.
               Scripts prepared for use by Stephen J. Pavlovich, Carleton S.
               Fiorina and Robert P. Wayman on this conference call are
               furnished herewith as Exhibit 99.2 and incorporated by reference
               in this Item 9. The furnishing of these scripts is not intended
               to constitute a representation that such furnishing is required
               by Regulation FD or that the materials they contain include
               material investor information that is not otherwise publicly
               available. In addition, all of the information in the
               presentations is presented as of February 13, 2002, and HP does
               not assume any obligation to update such information in the
               future.

<PAGE>

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.

                                    HEWLETT-PACKARD COMPANY

Date: February 13, 2002             By:   /s/ CHARLES N. CHARNAS
                                       ---------------------------------------
                                        Name: Charles N. Charnas
                                        Title: Assistant Secretary

<PAGE>

                          INDEX TO EXHIBITS FILED WITH
             THE CURRENT REPORT ON FORM 8-K DATED FEBRUARY 12, 2002

Exhibit                            Description
- --------------------------------------------------------------------------------

 99.1     Press release dated February 13, 2002 entitled "HP Reports First
          Quarter Results; 5% Sequential Revenue Growth; 1.2 ppt Sequential Pro
          Forma Gross Margin Increase; Pro Forma EPS of $0.29."

 99.2     Scripts prepared for use by Stephen J. Pavlovich, Carleton S. Fiorina
          and Robert P. Wayman for conference call at 1:30 p.m. PST, February
          13, 2002, discussing fiscal 2002 first quarter and 2002 guidance.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>dex991.txt
<DESCRIPTION>PRESS RELEASE DATED FEBRUARY 13, 2002
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

                      [HEWLETT-PACKARD COMPANY LETTERHEAD]

                                                                [HP INVENT LOGO]

                                                                    PR021302GP10
Editorial Contacts:

Dave Berman, HP
+1 650 857 7277
dave_berman@hp.com

Rebeca Robboy, HP
+1 650 857 2064
rebeca_robboy@hp.com

                        HP REPORTS FIRST QUARTER RESULTS

                          o   5% Sequential Revenue Growth
                          o   1.2 ppt Sequential Pro Forma Gross Margin Increase
                          o   Pro Forma EPS of $0.29


PALO ALTO, Calif., Feb. 13, 2002 -- Hewlett-Packard Company (NYSE:HWP) today
reported strong financial results for the first quarter of its 2002 fiscal year
ended Jan. 31, 2002.

Sequentially, on a pro forma basis, HP achieved revenue growth of 5% and an
increase in gross margins from 25.7% to 26.9%, while expense growth was held to
less than 1%. Pro forma earnings per share (EPS) was 29 cents. Operating cash
flow was approximately $1.6 billion.

The company reported first quarter revenue of $11.4 billion compared to $10.9
billion in the fourth quarter and $12.4 billion in last year's first quarter.
Revenue was down 8% year-over-year and 7% excluding currency effects. Operating
expenses on a pro forma basis were 20.6% of net revenue, compared to 21.4% last
quarter and 19.3% in the year-ago quarter.

Pro forma diluted EPS of 29 cents, compared to 19 cents in the fourth quarter
and 41 cents in the year-ago quarter, excluded $86 million in charges for
recurring and non-recurring costs related to various completed and planned
acquisitions, including Bluestone and Compaq.

Including these items, reported GAAP EPS was 25 cents per diluted share on
approximately 2 billion shares of common stock and equivalents outstanding.
Reported GAAP EPS for the same period last year was 20 cents per diluted share.

Carly Fiorina, HP chairman and chief executive officer, said, "We are facing the
dual challenges of a weak global economy and rapid industry transformation,
driven by advances in technology, changing customer requirements and increased
competition. Our first quarter results demonstrate HP's continued ability to
stay focused on customers and effectively execute our business plan regardless
of market conditions.


<PAGE>

Feb. 13, 2002

"Within this tough environment, we generated a meaningful increase in overall
revenue versus last quarter based on strong sales in consumer and commercial PCs
and digital imaging products, as well as exceptional growth in outsourcing. By
maintaining an intense focus on expense management and continuing to tune our
cost structure, we saw solid gross margin improvement. Profitability improved
significantly in our imaging and printing, embedded and personal systems and IT
services businesses, driving EPS above expectations.

"We managed assets aggressively and we reduced inventory by $746 million. Net
cash flow from operations was $1.6 billion for the quarter, and we exited the
period with more than $7 billion in cash and short-term investments on the
balance sheet.

"I want to thank the people of HP for executing so well and demonstrating what
we are capable of achieving.

"While I'm pleased with solid execution, HP needs to do more. We must take
decisive actions to improve profitability in computing systems and PCs.
Incremental steps will not be enough to attain industry leadership and create
shareowner value.

"Over the past two and a half years, our Board and management have looked at a
broad range of strategic alternatives. Merging with Compaq is the single best
way to simultaneously achieve market leadership, serve our customers, improve
our profitability, create exciting opportunities for employees and deliver
value for our shareowners.

"With Compaq's complementary capabilities, we will materially strengthen many
key HP businesses -- including servers, storage, PCs, and IT services and
support. These businesses are becoming increasingly interrelated with our
imaging and printing franchise, and must be sufficiently profitable in their own
right.

"The hard work of restructuring and refocusing HP during these past two and a
half years has laid the foundation for market leadership. While the integration
risks of any merger are real -- they can be managed. The risks of doing nothing
are far greater. And our execution these past two quarters demonstrates that
we're ready to take this decisive step. We must take it now to lead the
transformation and consolidation of our industry."


BUSINESS SEGMENT RESULTS

With this first quarter of the 2002 fiscal year, HP has broken out two
additional reporting segments: Embedded and Personal Systems, which includes
PCs, notebook PCs (previously reported in Computing Systems) and personal
appliances; and Financing (previously reported in IT Services). HP will
continue to report Imaging and Printing Systems, Computing Systems and IT
Services as separate segments.


IMAGING AND PRINTING SYSTEMS

The imaging and printing systems segment includes printer hardware, digital
imaging devices and associated supplies.

Revenue in this segment increased 2% sequentially and declined 2%
year-over-year. Operating margin was 14.6%, compared to 9.8% last quarter and
12.9% in the first quarter of last year. The sequential operating margin
increase reflects a favorable product mix, good inventory management, solid
expense control and beneficial movements in the yen.

Digital camera and photo printer revenue grew 30% sequentially and 34%
year-over-year. HP digital cameras continue to experience strong demand and
photo printers extended their

<PAGE>

Feb. 13, 2002

market leadership in the United States. Scanner revenue increased 21%
sequentially but decreased 17% year-over-year.

Business printer (personal and shared LaserJets, shared inkjets and commercial
printing) revenue increased 2% sequentially and declined 4% year-over-year. Home
printer (personal inkjet printers, Deskjet, Apollo and all-in-one devices)
revenue declined 2% sequentially and 23% year-over-year, reflecting the market's
continued movement to the low end, partially offset by strong unit growth,
particularly in all-in-ones. HP maintained its leading market share position in
low-end printers and launched several new products during the quarter.

During the first quarter, supplies revenue grew 1% sequentially and 9%
year-over-year.


COMPUTING SYSTEMS

The computing systems segment includes workstations and a broad range of
Internet infrastructure systems and solutions for business, including UNIX(R)
and IA-32 servers, storage and software solutions.

Revenue in this segment declined 4% sequentially and 21% year-over-year.
Operating margin was a negative 8.0%, compared to a negative 6.7% last quarter
and positive 2.3% a year ago, reflecting a highly competitive market and weak
global demand.

In servers, UNIX server revenue was down 7% sequentially and 21% year-over-year.
Amid difficult market conditions, HP Superdome servers continued to gain
acceptance among customers. With the fourth quarter introduction of the 16-way
rp8400 server and the pending refresh of its 8-way mid-range UNIX server, HP
solidified its market leading position in mid-range while maintaining its
position in the entry-level UNIX server market. IA-32 server revenue was flat
sequentially and down 21% year-over-year.

Storage revenue declined 4% sequentially and 13% year-over-year amid extremely
difficult pricing conditions. Software revenue declined 3% sequentially and 18%
year-over-year.


EMBEDDED AND PERSONAL SYSTEMS

The embedded and personal systems segment includes commercial desktop PCs, home
PCs, notebook PCs and personal appliances (smart handhelds and DVD+RW drives).

Revenue in this segment increased 22% sequentially but declined 13%
year-over-year. Operating margin was essentially breakeven, compared to a
negative 5.2% last quarter and negative 2.3% a year ago.

Commercial desktop revenue increased 11% sequentially and declined 15%
year-over-year. Consumer PC revenue increased 53% sequentially and declined 10%
year-over-year. Notebook PCs experienced sequential revenue growth of 4% and

<PAGE>

Feb. 13, 2002

year-over-year growth of 7% and continued to gain market share worldwide. Driven
by continued improvements in its cost structure and operating model and its
profitable consumer PC business, HP's overall PC business generated profits on a
global basis.

In personal appliances, revenue was down 23% sequentially and 54%
year-over-year, primarily as a result of HP's exit from the CD-writer business.
Smart handhelds continued to post good growth with a 31% sequential increase and
a 27% increase in revenue versus last year. Worldwide unit handheld shipments
were up 35% sequentially and 101% year-over-year.


IT SERVICES

The IT services segment includes support, outsourcing and consulting services.
Revenue for the segment grew 1% sequentially and 2% year-over-year (4% in
local currency).

Support revenue was flat sequentially and grew 5% year-over-year (7% in local
currency). Outsourcing revenue was up 16% sequentially and 31% year-over-year
(32% in local currency), reflecting increased interest among corporate clients
in pursuing cost-effective outsourcing capabilities in the midst of declining IT
budgets. Consulting revenue declined 2% sequentially and 13% year-over-year (an
11% decline in local currency).

Operating margin was 13.0%, compared to 10.9% for the last quarter and 10.2% for
the same period last year.


FINANCING

Revenue was down 6% both sequentially and year-over-year, reflecting tighter
credit controls and sluggish enterprise sales. Including charges related to the
Argentina peso devaluation, the financing business experienced a 2.0% operating
loss this quarter, compared to an operating loss of 14.0% last quarter and a
loss of 4.7% in the same period a year ago.


ASSET MANAGEMENT

Net cash generated from operations for the quarter was $1.6 billion. Inventory
declined by $746 million and was 10.1% of revenue, down from 11.5% last quarter
and 13.0% a year ago. Trade receivables were 9.4% of revenue compared to 9.9% in
the previous quarter and 11.0% a year ago. Net property, plant and equipment was
9.9% of revenue compared to 9.7% last quarter and 9.2% a year ago.


OUTLOOK

Overall market conditions continue to be somewhat unpredictable. We are
uncertain as to whether the consumer technology spending uptick will continue.
Enterprise IT spending continues to be slow. We continue to be conservative and
so, therefore, are expecting revenue in our second fiscal quarter of 2002 to be
down modestly on a sequential basis, and gross margins and expenses to be
approximately flat with the first quarter.

<PAGE>

Feb. 13, 2002


ABOUT HP

Hewlett-Packard Company -- a leading global provider of computing and imaging
solutions and services -- is focused on making technology and its benefits
accessible to all. HP had total revenue of $45.2 billion in its 2001 fiscal
year. Information about HP and its products can be found on the World Wide Web
at http://www.hp.com.

<PAGE>

Feb. 13, 2002

                    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
                                   (Unaudited)
                     (In millions except per share amounts)

<TABLE>
<CAPTION>
                                                    Three months ended
                                                         January 31,         Percent
                                                    -------------------      increase/
                                                     2002        2001(a)    (decrease)
                                                    ------      -------     ----------
<S>                                               <C>          <C>          <C>
Net revenue                                       $ 11,383     $ 12,398          (8)

Cost of sales                                        8,330        9,059
                                                  --------     --------
Gross margin                                         3,053        3,339

Operating expenses:
  Research and development                             678          704
  Selling, general and administrative                1,750        1,763
  Restructuring charges                                 -           102
                                                  --------     --------
      Total operating expenses                       2,428        2,569          (5)
                                                  --------     --------
Earnings from operations                               625          770         (19)

Interest and other, net                                 10           97
Net investment losses                                   -           365
                                                  --------     --------
Earnings before extraordinary item, cumulative
 effect of change in accounting principle
 and taxes                                             635          502          26

Provision for taxes                                    157          112
                                                  --------     --------
Net earnings before extraordinary item and
 cumulative effect of change in accounting
 principle                                             478          390          23

Extraordinary item - gain on early
 extinguishment of debt, net of taxes                    6           23

Cumulative effect of change in accounting
 principle, net of taxes(b)                              -         (272)
                                                  --------     --------

Net earnings                                      $    484     $    141         243
                                                  ========     ========
Basic net earnings per share:
  Net earnings before extraordinary item and
   cumulative effect of change in accounting
   principle                                      $   0.25     $   0.20
  Extraordinary item - gain on early
    extinguishment of debt, net of taxes                 -         0.01
  Cumulative effect of change in accounting
   principle, net of taxes(b)                            -        (0.14)
                                                  --------     --------
  Net earnings                                    $   0.25     $   0.07
                                                  ========     ========
Diluted net earnings per share:(c)
  Net earnings before extraordinary item and
   cumulative effect of change in accounting
   principle                                      $   0.25     $   0.20
  Extraordinary item - gain on early
    extinguishment of debt, net of taxes                -          0.01
  Cumulative effect of change in accounting
   principle, net of taxes(b)                           -         (0.14)
                                                   --------     --------
  Net earnings                                    $   0.25     $   0.07
                                                  ========     ========
Cash dividends declared per share                 $   0.16     $   0.16


Weighted-average shares used to compute net earnings per share:

  Basic                                              1,941        1,930
  Diluted(c)                                         1,963        1,996
</TABLE>

(a)  Certain reclassifications have been made to prior year balances in order to
     conform to the current year presentation.

(b)  HP adopted Securities and Exchange Commission Staff Accounting Bulletin No.
     101 ("SAB 101"), "Revenue Recognition in Financial Statements" in the
     fourth quarter of fiscal 2001, retroactive to November 1, 2000.

(c)  The calculation of diluted net earnings per share includes additional
     dilution from potential issuance of common stock, such as stock issuable
     pursuant to the exercise of stock options and the conversion of debt.

<PAGE>

Feb. 13, 2002

                    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
             PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
                      Excluding adjustments itemized below
                                   (Unaudited)
                     (In millions except per share amounts)
<TABLE>
<CAPTION>
                                                    Three months ended
                                                        January 31,          Percent
                                                    -------------------      increase/
                                                     2002         2001      (decrease)
                                                    ------       ------     ----------
<S>                                               <C>          <C>          <C>
Net revenue                                       $ 11,383     $ 12,398         (8)

Cost of sales                                        8,325        9,059
                                                  --------     --------

Gross margin                                         3,058        3,339

Operating expenses:
  Research and development                             678          685
  Selling, general and administrative                1,667        1,712
                                                  --------     --------
      Total operating expenses                       2,345        2,397         (2)
                                                  --------     --------

Earnings from operations                               713          942        (24)

Interest and other, net                                 10           97
                                                  --------     --------

Earnings before extraordinary item, cumulative
 effect of change in accounting principle
 and taxes                                             723        1,039        (30)

Provision for taxes                                    159          227
                                                  --------     --------

Net earnings before extraordinary item and
   cumulative effect of change in accounting
   principle                                      $    564     $    812        (31)
                                                  ========     ========

Net earnings per share before extraordinary
 item and cumulative effect of change in
 accounting principle:

  Basic                                           $   0.29     $   0.42
  Diluted                                         $   0.29     $   0.41

Weighted-average shares used to compute net
 earnings per share:

  Basic                                              1,941        1,930
  Diluted                                            1,963        1,996

The pro forma amounts above have been adjusted to exclude the following items:

Cost of sales:
  Amortization of purchased intangible assets     $      5     $     -

Operating expenses:
  Amortization of goodwill and purchased
   intangible assets                                    45           26
  Acquisition-related charges                           38           44
  Restructuring charges                                 -           102
                                                  --------     --------
    Total adjustments to operating expenses             83          172

Net investment losses                                   -           365

Income tax effect                                       (2)        (115)
                                                  --------     --------

Total pro forma adjustments                       $     86     $    422
                                                  ========     ========
</TABLE>

<PAGE>

Feb. 13, 2002

                    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                  (In millions)


<TABLE>
<CAPTION>
                                             January 31,        October 31,
                                                2002               2001
                                             -----------        -----------
                                             (unaudited)
<S>                                          <C>                <C>
ASSETS

Current assets:
  Cash and cash equivalents                   $  6,983           $  4,197
  Short-term investments                           158                139
  Accounts receivable, net                       4,134              4,488
  Financing receivables, net                     2,231              2,183
  Inventory                                      4,458              5,204
  Other current assets                           5,272              5,094
                                              --------           --------

    Total current assets                        23,236             21,305

Property, plant and equipment, net               4,388              4,397

Long-term investments and other assets           5,964              6,882
                                              --------           --------

Total assets                                  $ 33,588           $ 32,584
                                              ========           ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable and short-term borrowings     $  1,462           $  1,722
  Accounts payable                               3,602              3,791
  Employee compensation and benefits             1,554              1,477
  Taxes on earnings                              1,835              1,818
  Deferred revenues                              1,873              1,867
  Other accrued liabilities                      3,555              3,289
                                              --------           --------

    Total current liabilities                   13,881             13,964

Long-term debt                                   4,528              3,729

Other liabilities                                  967                938

Stockholders' equity                            14,212             13,953
                                              --------           --------

Total liabilities and stockholders' equity    $ 33,588           $ 32,584
                                              ========           ========
</TABLE>

<PAGE>
Feb. 13, 2002


                    HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
                               SEGMENT INFORMATION
                                   (Unaudited)
                                  (In millions)

Net revenue (which includes intersegment revenue) and earnings from operations
for each segment are provided in the tables below:

<TABLE>
<CAPTION>
                                                    Three months ended
                                                        January 31,            Percent
                                                    -------------------        increase/
                                                     2002         2001(a)     (decrease)
                                                    ------       ------       ----------
<S>                                               <C>          <C>              <C>
Net revenue:

  Imaging and Printing Systems                    $  5,096     $  5,185         (2)
  Embedded and Personal Systems                      2,466        2,831        (13)
  Computing Systems                                  1,999        2,541        (21)
  IT Services                                        1,558        1,526          2
  Financing                                            342          363         (6)
  Other                                                 -            88       (100)
                                                  --------     --------
     Total Segments                                 11,461       12,534
                                                  --------     --------
  Eliminations / Other                                 (78)        (136)
                                                  --------     --------
     Total HP Consolidated                        $ 11,383     $ 12,398         (8)
                                                  ========     ========


Earnings from operations:

  Imaging and Printing Systems                    $    742     $    671         11
  Embedded and Personal Systems                         (4)         (66)        94
  Computing Systems                                   (160)          58       (376)
  IT Services                                          203          155         31
  Financing                                             (7)         (17)        59
  Other                                                 -           (28)       100
                                                  --------     --------
     Total Segments                                    774          773
                                                  --------     --------
  Eliminations / Other                                (149)          (3)
                                                  --------     --------
     Total HP Consolidated                        $    625     $    770        (19)
                                                  ========     ========
</TABLE>

(a)  Certain reclassifications have been made to prior year balances to conform
     to the current year presentation.

                                    * * * * *

UNIX is a registered trademark of the Open Group.


FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of HP and its consolidated subsidiaries to
differ materially from those expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including any
projections of earnings, revenue, synergies, accretion or other financial items;
any statements of the plans, strategies, and objectives of management for future
operations, including the execution of integration and restructuring plans and
the anticipated timing of filings, approvals and closings relating to planned
acquisitions; any statements concerning proposed new products, services,
developments or industry rankings; any statements regarding future economic
conditions or performance; statements of belief and any statements of
assumptions underlying any of the foregoing.

The risks, uncertainties and assumptions referred to above include the ability
of HP to retain and motivate key employees; the timely development, production
and acceptance of products and services and their feature sets; the challenge of
managing asset levels, including inventory; the flow of products into
third-party distribution channels; the difficulty of keeping expense growth at
modest levels while increasing revenue; the challenges of integration and
restructuring associated with acquisitions and achieving anticipated synergies;
the possibility that planned acquisitions may not close or that modifications of
some aspects of planned acquisitions may be required in order to obtain
regulatory approvals; the assumption of maintaining revenue on a combined
company basis following acquisitions; and other risks that are described from
time to time in HP's Securities and Exchange Commission reports, including but
not limited to HP's annual report on Form 10-K, as amended on January 30, 2002,
for the fiscal year ended October 31, 2001 and subsequently filed reports. HP
assumes no obligation and does not intend to update these forward-looking
statements.


ADDITIONAL INFORMATION ABOUT THE COMPAQ MERGER AND WHERE TO FIND IT

On February 5, 2002, HP filed a registration statement with the SEC containing a
definitive joint proxy statement/prospectus regarding the Compaq merger.
Investors and security holders of HP and Compaq are urged to read the definitive
joint proxy statement/prospectus filed with the SEC on February 5, 2002 and any
other relevant materials filed by HP or Compaq with the SEC because they
contain, or will contain, important information about HP, Compaq and the merger.
The definitive joint proxy statement/prospectus and other relevant materials
(when they become available), and any other documents filed by HP or Compaq with
the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the documents
filed with the SEC by HP by contacting HP Investor Relations, 3000 Hanover
Street, Palo Alto, California 94304, 650-857-1501. Investors and security
holders may obtain free copies of the documents filed with the SEC by Compaq by
contacting Compaq Investor Relations, P.O. Box 692000, Houston, Texas
77269-2000, 800-433-2391. Investors and security holders are urged to read the
definitive joint proxy statement/prospectus and the other relevant materials
(when they become available) before making any voting or investment decision
with respect to the merger.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>dex992.txt
<DESCRIPTION>SCRIPTS PREPARED FOR USE BY S. PAVLOVICH, C. FIORINA & R. WAYMAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.2

STEPHEN J. PAVLOVICH:

Good afternoon. I'd like to welcome all of you to our first quarter conference
call. Joining me today is our Chairman and CEO, Carly Fiorina, and Bob Wayman,
our chief financial officer.

Before we get started, I'd like to remind you that the call is being webcast on
hp.com. Click on "Investor Relations" and then "Listen to Q1 earnings conference
call". A replay will also be available shortly after the conclusion of the call
through February 20th.

Next, it's my duty to inform you that the primary purpose of this call is to
provide you with information regarding the quarter just ended. It's possible,
however, that some of our comments and responses to your questions may include
forward-looking statements. These statements are subject to a number of risks
and uncertainties, and actual future results may vary materially. Again, I
encourage you to read the risks described in the company's annual report on form
10-K for the year ended October 31, 2001 filed with the SEC for an understanding
of the factors that may affect the company's businesses and results.

Now, before I turn things over to Carly and Bob, I'd like point out a couple of
changes that we've made to our segment reporting starting this quarter. We have
added two new segments to provide better visibility into our businesses, and to
make our reporting more consistent with the way we manage the businesses.
Specifically, in addition to the Imaging and Printing, Computer Systems, IT
Services and "Other" segments, we will now be reporting Embedded and Personal
Systems and Financing as separate segments. The Embedded and Personal Systems
segment includes all of our PC business, both consumer and commercial, as well
as our handheld and appliance businesses. In addition, Financing has been
separated to provide better visibility to the workings of our financing business
on a standalone basis and to eliminate confusion created when it was included in
IT Services. We have prepared restated segment data for the FY01 by quarter and
posted it on the IR website for your convenience.

So, with that, I'll turn things over to Carly for her remarks.


CARLETON S. FIORINA:

Thank you, Steve.

This afternoon we announced our first quarter results. Given the difficult
environment we are operating in, we are pleased with our performance... and I
want to thank the people of HP for their focus and hard work -- they didn't get
distracted when there was plenty of opportunity to do so.

Here's a quick summary.

We reported first quarter revenue of $11.4 billion, up 5% sequentially from
$10.9 billion in the fourth quarter and down 8% from the $12.4 billion reported
in the same period last year. This sequential top line growth -- driven largely
by strong sales in consumer and commercial PCs, digital imaging products and our
outsourcing business -- is particularly encouraging given that we were
anticipating a slight revenue decline at the start of the quarter.

Also encouraging is that we significantly increased gross margin. Pro forma
gross margin was 26.9%, up substantially from 25.7% in the prior quarter and
flat with last year.

We maintained our focus on managing our cost structure; keeping expenses
essentially flat sequentially -- up less than 1% on a pro forma basis -- and
down 2% year-over-year.

As a result, we reported pro forma earnings per share of 29 cents, compared
with 19 cents in the preceding quarter and 41 cents in the year-ago quarter.

<PAGE>


On the balance sheet side, we had another strong quarter in terms of cash
generation and inventory management. Cash flow from operations was $1.6 billion
during the quarter and we exited the quarter with more than $7 billion in cash
and short-term investments on the balance sheet. Again, this strong performance
was helped by solid inventory management -- inventory was down nearly $750
million in the quarter as we continue to improve our execution throughout the
supply chain and distribution.

Market conditions remain tough worldwide -- both in the consumer and the
enterprise space. We did see an uptick in consumer spending in North America,
Europe and Asia Pacific, largely holiday-related and centered in our digital
imaging and consumer PC businesses. While the holiday spending season was a
pleasant surprise -- and one we didn't let slip by -- we're not counting on it
repeating in this post-holiday quarter. Our performance in this market requires
that we continue to be sharp in our execution.

The enterprise market is even tougher and continues to be characterized by
sluggish corporate IT spending, very aggressive competition and tough deal
pricing. This is particularly true among our largest corporate customers and in
the telecom, airlines, manufacturing and high-tech industries. Although we did
see some improvement in spending habits and overall tone across our business
customers we continue to believe a recovery won't occur until the second half of
this year, and we're managing the business accordingly.

So it's with that backdrop that I'd offer some context... a few key takeaways...
from this quarter's results. Takeaways that you'll hear Bob echo as he talks
more specifically about the segments.

First, the hard work of restructuring and refocusing HP during these past
two-and-a-half years has laid the foundation for an organization that has the

<PAGE>


capability to lead. Our execution over these past two quarters demonstrates that
we are ready to take a decisive step to strengthen the business.

The people of HP CAN execute -- and they've proven it. Think about the
challenges these employees have had to face up to and overcome: a very difficult
economic environment worldwide; an industry undergoing rapid transformation;
intense competition; and a distracting proxy contest that none of us could have
predicted but one we're determined to win. This team has shown their mettle and
turned in results that I think are worthy of praise.

But more importantly, I think these results demonstrate we know our business --
better than anyone else. We recognize where we are strong... and where we need
to strengthen.

On the consumer side, we got a lift from our digital imaging business. We had
strong sequential revenue growth, reflecting not only the better than expected
holiday buying season, but the fact that we have outstanding products in the
marketplace supported by smart marketing and a well-oiled supply chain. Our
digital cameras continue to be a strong performer -- a consistent seller, which
achieved the number one market share position in U.S. retail in November. Our
photo printer businesses showed 159% unit growth and also held the number one
U.S. retail market position in November.

And we are winning in low-end printing. HP retained the number one worldwide
position in the sub-$100 category with a 34% share. And we're not relenting;
we'll continue to offer next-generation products that offer superior performance
with a cost structure specifically designed for this category.

In consumer PCs, we achieved solid profit and share, and stronger than expected
revenues. We hit new market share highs -- especially in North America -- where
we captured 59% of the U.S. retail market in November according to

<PAGE>


the most recent industry data. This strong performance on the consumer side,
plus tight operational focus, led to profitability -- albeit slight -- in the
overall PC business. We've got some good things going on in this business. We
need to build on them -- not tear it down as some have suggested.

We are continuing to see good demand for supplies. Our supplies revenue showed
strong year-over-year growth of 9%, driven by an increase in unit volume. This
is a good example of where innovation counts -- it may seem like a
straightforward business, but being ahead of the innovation curve is critical to
driving demand. This quarter we introduced several new cartridge formats and are
working with new partners in areas like mail addressing, invisible document
coding, and ID cards -- something very top of mind these days.

On the enterprise side, we're focused on a few things: improving our market
position in the fastest growing segments, strengthening our end-to-end solutions
delivery capability, capitalizing on customers' movement toward premier support
and outsourcing providers, and controlling costs.

Our UNIX(R) business delivered healthy margins and good expense control. We ARE
profitable here. Superdome is now a proven technology that continues to gain
momentum. And we are rolling over our mid-range line and will have a strong
product line-up in the market when conditions improve.

In services, we saw outstanding year-over-year growth. In local currency, we
grew outsourcing 32%, and achieved 7% revenue growth in our highly profitable
support services, where our capabilities are really resonating with corporate
clients as they struggle to maintain effectiveness with shrinking IT budgets.
Support is a business that generates very strong double-digit operating profit
margins quarter after quarter -- it's a business, like supplies, where more is
better. And it provides terrific opportunities for up-sell.

<PAGE>


So, we have real strengths. And we've made significant progress. But this isn't
the end-game. It's a platform to build on. We also know our weaknesses and we
know what we need to do to fix them.

In the commercial PC business, we are operating at a loss and we lack the direct
distribution capabilities needed to improve our competitive position.

In storage, while we have strong capabilities, we don't have enough capacity in
networked storage to lead.

We still struggle in the low-end IA-32 server arena. More and more low- and
mid-range applications will be delivered on Windows and Linux servers -- HP has
been losing momentum and losing money in our Windows business for almost two
years. Today, our overall IA-32 server unit market share is about 9%. And while
we've made great progress in Linux, our efforts here need to be beefed-up
quickly. We need a winning multi-OS server business to be successful in
enterprise computing and to execute on our strategy.

Our services organization has the skills and the capability to really succeed --
but it needs more scale to compete for and win the biggest potential business
opportunities out there.

And it's worth repeating... too much of our profitability comes from our imaging
and printing business. We have to invest more in imaging and printing to lead,
which means our other businesses have to pay their own way. Continued growth in
imaging and printing requires creating new categories such as digital publishing
and digital imaging. And these growth opportunities depend upon the capabilities
we have in computing and storage and servers and network management.

<PAGE>


And this is where the merger with Compaq comes in.

HP needs to take decisive actions to further improve our market position and
profitability, especially in computing systems and commercial PCs. These
businesses are important pieces of our broader portfolio and must be
sufficiently profitable in their own right.

Let's talk about PCs. Over the last year-and-a-half Compaq has created a
successful direct delivery engine that has improved its annual inventory turns
in that business from 23 to 62 -- a more than 100% improvement year over. They
ship about 70% of their commercial volume in North America through their direct
channel, comparable to Dell. Combining our successful retail PC business model
with their commercial business model allows us to achieve much more together
than we could alone.

Compaq is the leading provider of storage systems in the world on a revenue
basis. With Compaq, we will become the number one player in storage, and the
leader in the fastest growing segment of the storage market storage area
networks. Coupled with our high-end storage management capabilities, it's a
winning play.

With Compaq, we will become number one in Windows, number one in Linux and
number one in UNIX(R). This new strength and our market presence make us a much
more attractive partner. And with our combined market position in servers, we
will be able to engage the software community in building the applications that
will drive demand for Itanium systems.

With Compaq, we will double our service and support capacity in the area of
mission-critical infrastructure design, outsourcing and support, giving us the
meaningful scale to play a leadership role in this business. And we will double
the size of our sales force, allowing us to serve more customers more
effectively.

<PAGE>


The simple fact is HP has a lot going for it. But there are also significant
areas where a lot more is needed. And with Compaq we have a detailed plan -- not
just platitudes -- to address them.

With that, let me turn the call over to Bob to give you more detail on the
numbers.

Bob...

<PAGE>

ROBERT P. WAYMAN:

Thanks Carly,

Given our performance this quarter, it's a real pleasure to review the numbers
with you today.

Nine days ago we indicated that we would exit our fiscal Q1 stronger on both
the top and bottom line than our previous guidance at the beginning of the
quarter. Our original expectations were based on very uncertain market
conditions in both the enterprise and consumer markets and uncertainty about the
impact of our proposed merger with Compaq. Given these challenges, our
performance during the quarter was encouraging as it showed the underlying
strength of our business and the continued ability of the HP team to execute
during challenging times.

So let's look at the numbers...

At a high level, we achieved revenue of $11.4 billion during the quarter and pro
forma EPS of 29 cents. This represents 53% sequential growth, and a 29% decline
year-over-year. Pro forma gross margin improvement to 26.9% during the quarter
contributed significantly to bottom line performance, as did continued
aggressive expense management. Expenses were up less than 1% from Q4 on a pro
forma basis.

<PAGE>

Q1 revenue of $11.4 billion was up 5% from Q4 of last year, significantly above
our original sequential guidance of "down slightly". As a reminder, Q1 is
typically down from Q4 due to normal seasonality so this was a pretty solid
quarter. Revenue strength was driven predominantly by our consumer business
where strong demand for consumer PC's and digital imaging products pushed
consumer revenue up nearly 10% sequentially. Enterprise revenue was flat from
the prior quarter while IT-service revenue was up 1%.

On a year-over-year basis, revenue was down 8% in dollars and 7% in constant
currency. Since currency really wasn't very significant this quarter, my
comments will be in dollar terms unless I make specific comments to local
currency. While the challenging economic environment is clearly global in
nature, European performance was the strongest versus the prior quarter.
Sequentially, European revenue was up 12% compared to revenue growth of only 1%
in both the U.S. and Asia Pacific. Latin America continues to be a difficult
economic environment with revenue down 6% from Q4.

On a year-over-year basis, U.S. revenue was down 9%, while European revenue was
down 5%. Asia Pacific performance was relatively good in local currency terms
compared to last year, down only 3%, but significant currency devaluation
throughout the year particularly in Japan pushed the decline to 9% in dollar
terms.



<PAGE>

Finally, Latin America was notably weak with year-over-year revenue down 18%.

A few country details for year-over-year performance: within Asia Pacific, Japan
and Australasia were each down 18%. Korea declined 7% while China continues to
be a source of strength with revenue growth of 9% from last year. In Europe,
most countries were flat or showed little change year-over-year. However,
weakness in the U.K., down 24%, and Germany, down 11%, hurt overall region
performance.

As we enter Q2, we remain cautious and are not counting on Q1's strong consumer
demand to continue. The enterprise spending environment remains weak. As a
result, we now expect Q2 revenues to be down modestly from our Q1 level.

Next, gross margin...

We exited Q1 with a pro forma gross margin of 26.9%, a marked improvement from
Q4's 25.7%. At 26.9% we are in line with last year's Q1, an excellent result in
the context of an 8% lower top line. Improvement was company-wide with all of
our reported business segments registering sequential gross margin expansion.
Driving the above-plan performance in gross margin were higher than expected
revenue and improved mix to higher margin products in our inkjet and PC
businesses. Our workforce reduction actions, which have been



<PAGE>

key in driving down expenses, also helped cost of sales. In addition, a
favorable yen benefited cost of sales in our LaserJet business.

Looking ahead to Q2, we expect gross margin to be approximately flat
sequentially.

Moving on to operating expenses...

Pro forma operating expenses were up less than 1% sequentially, and down 2%
year-over-year. As a percentage of revenue, expenses ended the quarter at 20.6%,
down from Q4's 21.4%. The numbers don't fully reflect the excellent progress we
made in managing expenses during the quarter because our above plan quarter
resulted in a higher bonus expense than was initially forecast. Were it not for
this incremental cost, total operating expenses would have been down 1%
sequentially.

Going forward, we are continuing to streamline our business and improve our cost
structure. You'll recall that in Q3 and Q4 we took temporary measures to reduce
short-term expenses. At the same time, we began a longer-term reduction in cost
structure with the implementation of the workforce reduction program announced
in July. That program called for the reduction of 6,000 positions with the goal
of improving our long-term cost structure. In addition to the 4,100 people who
left the company in Q4, some 1,350 people left the company as part of the
workforce reduction program during Q1. Most of the remaining position cuts will
occur during Q2. While our cost



<PAGE>

structure is clearly improving, it's seasonally typical that Q2 expenses
increase over Q1. Given these offsetting effects, I'd model Q2 expenses roughly
at Q1 levels.

Pro forma operating margin of 6.3% was up from last quarter's 4.3%, but down
from the year ago quarter's 7.6%. Other income was a positive $10 million and
our tax rate remained constant at 22%, both figures consistent with our original
quarterly guidance. All in all, a pretty solid quarter during some pretty
challenging times.

Looking forward to Q2, we expect the other income number to be about zero, with
a range of +/- $20-million and the pro forma tax rate to remain unchanged at
22%.

As Steve outlined earlier, we have redefined our business segments. We made the
change to provide better visibility into the dynamics of our various businesses
and to be consistent with how we manage the businesses. We hope that you find
the changes useful.

So, let's review segment performance...

Starting with the Imaging and Printing Systems segment, revenue was up 2%
sequentially, but down 2% year-over-year in both dollars and constant currency.
Business printers were up 2% sequentially while home printers were down 2% from
the prior quarter. We've



<PAGE>

talked a lot in recent quarters about low-end growth within our single-function
Inkjet business. Lower ASP's in this market hurt inkjet revenue growth again
this quarter. However, we are seeing an offsetting change in mix toward higher
margin multi-function printers and high-value imaging devices from single
function printers. Of combined home and digital imaging categories, photo
printers and all-in-ones rose from 24% of revenue to 32% year-over-year.

Digital imaging, including digital cameras, photo printers and scanners showed
growth of 26% from the prior quarter, the result of a better than expected
holiday selling season. Photo printers, a particularly hot product category, saw
triple digit unit growth year-over-year.

The supplies business is healthy, up 9% year-over-year and 1% sequentially. This
compares to 6% year-over-year growth in Q4 and flat year-over-year growth in Q3.
This upward trend combined with strong growth in ink-intensive all-in-one
products and photo printers is a good foundation for continued strong revenue
performance. Moreover, we continue to protect Inkjet margins by vigorously
defending our intellectual property.

Finally, while imaging and printing revenues were solid, the real story was
operating profit performance for this segment which at 14.6% was well above last
quarter's 9.8%, and last year's 12.9%. Continued price competition, the
investment we're making in commercial printing and the ongoing need for greater
R&D, will put pressure on margins.



<PAGE>

Mitigating this pressure is solid unit growth contributing to a larger installed
base, and a better mix of ink-rich, all-in-one and photo printers. Given these
dynamics, this quarter's result is likely a high water mark for operating profit
going forward.

Moving to Computing Systems, Q2 was another tough quarter as weak enterprise
spending continued to present challenges. Overall revenue was down 21% from a
year ago and down 4% from Q4. Operating margin declined to negative 8%, down
from last quarter's negative 6.7%. While Unix(R) continues to be profitable, it
is clear that we need to take steps necessary to improve the profitability of
our other enterprise businesses. Our goal is to position this business for
success once enterprise spending picks up again. To that end, we've made a lot
of progress. Our Unix(R) lineup is as solid as it's ever been and while overall
Unix(R) revenues were down 7% sequentially, our strategically important
mid-range Unix(R) business posted its first sequential gain since Q4 of 2000, up
3%.

Revenue in our IA-32 Industry Standard Server business was flat sequentially,
even as we were improving our cost structure in this business. Storage revenues
were down 4% from Q4, in large part because of intense price competition, and
software finished the quarter down 2% from Q4 levels.

Now to Embedded and Personal Systems where we made significant progress during
the quarter. Overall revenue was up 22%



<PAGE>

sequentially, including 53% growth in home PCs, and 31% growth in handheld
devices. Commercial PC's and notebooks also posted solid gains in sequential
revenue. We achieved these results while updating our commercial lineup to
include the new E-PC P4 in December and the new VL-420 in January. We also were
first to market in every major region with machines running the new XP operating
system. Not only did this demonstrate strong execution, but it also gave us time
to market volume and pricing advantages versus our competition.

On the margin front, strong demand for consumer PCs combined with better mix
pushed operating profit to 3% for our home PC category. And while commercial
PCs did not quite break even for the quarter, we did improve our operating
margin to its best level since Q1 of last year. Despite the notion that the PC
business is not a good business, our combined PC business was profitable during
the quarter. Overall operating margin for the Embedded and Personal Systems
business was very nearly breakeven, finishing the quarter at minus 0.2%, better
than any quarter since FY2000.

Moving to IT Services, Q1 was another solid quarter. Revenue was up 1%
sequentially and 2% year-over-year. Tighter IT budgets pushed consulting revenue
down 4% sequentially, but benefited our counter-cyclical outsourcing business
which achieved growth of 16% sequentially and 31% year-over-year. Support
services continued to be a strong annuity asset in a challenging worldwide
economy, reliable on the top line, with year-over-year revenue growth of 5%,



<PAGE>

and superb on the bottom line. That's why we say support is a lot like
supplies..........more is better! Driving growth was the continued move to
mission-critical services and the growth in storage and network support, all
higher value and higher margin services.

IT Services operating margin performance continued to improve, finishing the
quarter at 13%, up from last quarter's 10.9%. Improvements in outsourcing and
consulting margins drove overall operating profit improvements.

Finally, within our Financing segment, we've taken a lot of action in recent
quarters to improve performance, including: tightening credit policies, more
conservative residual assumptions, improving the mix between operating and
rental leases, and the write-down of bad accounts. I'm pleased to report that we
are finally starting to see the results of these efforts. For Q1, our financing
business operating margin improved to minus 2%, up significantly from any period
last year. Excluding $25 million of charges in Argentina, operating profit would
have been 5%. Revenue showed the effect of our tightened policies and a
generally down enterprise environment. All in all, we've made a lot of progress
in this business, and while we still have a lot of work left to do, we're
beginning to see some positive results.

Next, let me take a few minutes to review our balance sheet, asset management
and cash position.



<PAGE>

We exited Q1 with inventory levels in excellent shape, down $750 million from
Q4. This on top of the $600 million sequential decrease we reported to you last
quarter. Virtually every business segment showed declines in inventory from the
prior quarter with the bulk of the decline, $650 million, in imaging and
printing. While we did a good job managing inventory during the quarter, greater
than anticipated demand for some of our imaging and printing products created
backorder issues for some of our products. As such, inventory levels are likely
to increase going forward so that we avoid shortages of product.

I want to be clear in saying that our inventory results are the outcome of solid
inventory management, not write-offs or moving inventory into the channel. As a
percentage of revenue, inventory ended the quarter at 10.1%, significantly down
from last January when it stood at 13%. In the channel, inventory levels rose
mildly to traditional holiday levels in November and December before retreating
to expected levels in January. Channel inventories ended the quarter in line
with our normal expectations...PCs at 4 1/2 weeks, is where they should
be given the recent introduction of new products. Ink printers at 4 weeks were
within plan, ink supplies at 4 1/2 weeks were somewhat below optimal levels,
while some of our more popular all-in-one and photo printers were well below
desired levels.

Trade receivables was another good story for us during the quarter as we drew
them down by more than $350 million sequentially. This is a nice result in the
context of 5% sequential revenue growth.



<PAGE>

Receivables currently stand at 9.4% of annual revenues versus last year's 11%,
and DSO is down both sequentially and from the first quarter of last year.

On the liability side of the balance sheet, we drew down short-term debt by $260
million during the quarter while increasing long-term debt by $800 million.

Our strong inventory and receivables stories contributed to an excellent cash
flow quarter. Net cash from operations was $1.6 billion for the quarter. Last
year when we were still adjusting to a tougher economic environment, Q1
operations resulted in a net use of cash of nearly $600 million. As the numbers
indicated, we've definitely made the right adjustments to our business model and
we executed business fundamentals pretty well throughout the quarter.

Finally, looking at capital assets... property, plant and equipment ended the
quarter virtually unchanged from the start of the quarter with asset
depreciation offsetting net capital expenditures. Capital expenditures net of
dispositions was $256 million during the quarter compared with $321 million for
the same period last year.

In summary, I am really pleased with our cash and asset management during the
quarter. Our P&L is benefiting from an improving cost structure, the balance
sheet is in good shape, and exceptional execution and improved profitability
resulted in very solid cash generation during the quarter. Given the current
consumer and



<PAGE>

enterprise spending environments, I feel good about our financial position as we
enter Q2. Clearly there are challenges ahead, but we're well positioned to deal
with them.

On that note, I'll turn things back to Carly for a few concluding remarks.


<PAGE>

CARLETON S. FIORINA:


Thanks.  Just a couple points and we'll open up the lines.

I think it's clear we aren't distracted by the merger or the challenge of
integration. And our customers aren't defecting. Our merger with Compaq has the
attributes of mergers that have succeeded.

This is a merger of like businesses coming together -- a merger of
consolidation, not diversification. HP and Compaq are in the same businesses, we
understand each other, we speak the same language. This is a merger that creates
market leadership.

It is a rare opportunity when a technology company can, at the same time, build
substantial market leadership and substantially reduce its cost structure. And
this is possible because Compaq and HP are in the same businesses, pursuing the
same strategies, in the same markets, with complementary capabilities.

This is a merger that we expect to be substantially accretive even with revenue
losses baked in. This is a merger with lots of upside potential in both cost
synergies and revenue.




<PAGE>

This industry is beginning to consolidate; and current technology industry
dynamics are much more akin to other consolidating industries -- where mergers
are not only workable, but a strategic imperative.

The timing of this deal is also important. Unlike so many, particularly in the
high-tech arena, we're doing this merger at the near bottom of a market cycle
not the top. That means valuations are fair, customers aren't making major IT
investments, and our competitors are in a holding pattern or dealing with
business model challenges of their own as they adjust to lower overall industry
growth rates. And perhaps most importantly, our employee base is stable.
Attrition at HP and Compaq are near all-time lows.

And, we're not leaving anything to chance. A group of more than 450 dedicated
people, between HP and Compaq, have been working around the clock to understand
the complexity of past mergers and make the right decisions for the new company.
We're drawing on our very direct experience spinning out Agilent as well as
Compaq's acquisitions of DEC and Tandem. And we're working with people who've
been involved in lots of mergers and know what makes the difference between
success and failure.

We are addressing the critical factors for successful merger execution --
including ensuring an unyielding focus on customers throughout the pre- and
post-close integration process; developing clear product roadmaps, defining
governance for the new company; preparing ourselves for day one across every
level of the company; developing rigorous plans for capturing the cost savings
we have identified, as well as upside in revenues; and staying in constant
communication with employees and stakeholders. Interestingly, the adversity
we've faced has brought the two organizations even closer together and created
an even more unified and committed team.



<PAGE>


We are on a path toward enhancing shareowner value. Every day, it's becoming
clearer: what these two companies can achieve together, is greater than what
either company could achieve on its own.

Now I'd like to open up the call to take your questions.

<PAGE>

FORWARD-LOOKING STATEMENTS

These scripts contain forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of HP and its consolidated subsidiaries to
differ materially from those expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including any
projections of earnings, revenue, synergies, accretion or other financial items;
any statements of the plans, strategies, and objectives of management for future
operations, including the execution of integration and restructuring plans and
the anticipated timing of filings, approvals and closings relating to planned
acquisitions; any statements concerning proposed new products, services,
developments or industry rankings; any statements regarding future economic
conditions or performance; statements of belief and any statements of
assumptions underlying any of the foregoing.

The risks, uncertainties and assumptions referred to above include the ability
of HP to retain and motivate key employees; the timely development, production
and acceptance of products and services and their feature sets; the challenge of
managing asset levels, including inventory; the flow of products into
third-party distribution channels; the difficulty of keeping expense growth at
modest levels while increasing revenue; the challenges of integration and
restructuring associated with acquisitions and achieving anticipated synergies;
the possibility that planned acquisitions may not close or that modifications of
some aspects of planned acquisitions may be required in order to obtain
regulatory approvals; the assumption of maintaining revenue on a combined
company basis following acquisitions; and other risks that are described from
time to time in HP's Securities and Exchange Commission reports, including but
not limited to HP's annual report on Form 10-K, as amended on January 30, 2002,
for the fiscal year ended October 31, 2001 and subsequently filed reports. HP
assumes no obligation and does not intend to update these forward-looking
statements.

ADDITIONAL INFORMATION ABOUT THE COMPAQ MERGER AND WHERE TO FIND IT

On February 5, 2002, HP filed a registration statement with the SEC containing a
definitive joint proxy statement/prospectus regarding the Compaq merger.
Investors and security holders of HP and Compaq are urged to read the definitive
joint proxy statement/prospectus filed with the SEC on February 5, 2002 and any
other relevant materials filed by HP or Compaq with the SEC because they
contain, or will contain, important information about HP, Compaq and the merger.
The definitive joint proxy statement/prospectus and other relevant materials
(when they become available), and any other documents filed by HP or Compaq with
the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the documents
filed with the SEC by HP by contacting HP Investor Relations, 3000 Hanover
Street, Palo Alto, California 94304, 650-857-1501. Investors and security
holders may obtain free copies of the documents filed with the SEC by Compaq by
contacting Compaq Investor Relations, P.O. Box 692000, Houston, Texas
77269-2000, 800-433-2391. Investors and security holders are urged to read the
definitive joint proxy statement/prospectus and the other relevant materials
(when they become available) before making any voting or investment decision
with respect to the merger.

                                    * * * * *

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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