2014Annual Report 3 )LVFDOZLOOEHDGHƬQLQJ \HDUIRU+32XUFKDOOHQJHt DQGRXURSSRUWXQLW\tLVWR take our performance to the QH[WOHYHOZKLOHH[HFXWLQJ WKHVHSDUDWLRQ:HDUH determined not to skip a EHDWLQƬVFDO Meg Whitman &KDLUPDQ3UHVLGHQWDQG&(2 4 Dear Stockholders, +3DFKLHYHGDJUHDWGHDOGXULQJƬVFDOWKHWKLUG\HDURI RXUƬYH\HDUWXUQDURXQGHƫRUW)URPUHYHQXHWRSURƬWDELOLW\ WRLQQRYDWLRQZHUHLQIRUFHGWKHIRXQGDWLRQWKDWZHKDYHEHHQ EXLOGLQJIRUORQJWHUPVXFFHVVDQGLQGXVWU\OHDGHUVKLS 7RDFFHOHUDWHRXUSURJUHVVZHDQQRXQFHGWKHVHSDUDWLRQ RI+3LQWRWZRQHZPDUNHWOHDGLQJFRPSDQLHV Year in Review ,QƬVFDORXUVXFFHVVZDVDOODERXWH[HFXWLQJRQWKHFRPPLWPHQWVZHPDGHWRRXUFXVWRPHUV SDUWQHUVVWRFNKROGHUVDQGHPSOR\HHV:HUHLJQLWHGLQQRYDWLRQDFURVV+3IXUWKHUVWUHQJWKHQHGRXU OHDGHUVKLSGHOLYHUHGFDVKƮRZDERYHH[SHFWDWLRQVIRUWLƬHGRXUEDODQFHVKHHWDQGJUHZQRQ*$$3 QHWHDUQLQJVSHUVKDUH p(36q $12.3B 2QHRIRXUELJJHVWDFFRPSOLVKPHQWVZDVVWDELOL]LQJRXUUHYHQXHWUDMHFWRU\1HWUHYHQXHIRUƬVFDO\HDU LQFDVK ZDVELOOLRQGRZQ\HDURYHU\HDURUƮDWRQDFRQVWDQWFXUUHQF\EDVLV 7KLVZDVD FULWLFDOVWHSLQSRVLWLRQLQJ+3IRUDUHWXUQWRJURZWK ƮRZIURP :LWKƬVFDOFDVKƮRZIURPRSHUDWLRQVRIELOOLRQZHRQFHDJDLQH[FHHGHGRXUH[SHFWDWLRQV RSHUDWLRQV 2XURSHUDWLQJFRPSDQ\QHWFDVKSRVLWLRQRIELOOLRQLVDVLJQLƬFDQWLPSURYHPHQWIURPWKH ELOOLRQRIRSHUDWLQJFRPSDQ\QHWGHEWDWWKHHQGRIWKHƬUVWTXDUWHURIƬVFDO7KLV\HDUZHZHUH IRUƬVFDO DEOHWRUHWXUQELOOLRQWRVWRFNKROGHUVWKURXJKGLYLGHQGVDQGVKDUHUHSXUFKDVHV :HDOVRGHOLYHUHGQRQ*$$3GLOXWHGQHW(36RIIRUƬVFDOtDWWKHKLJKHQGRIRXURXWORRN UDQJHDQGXS\HDURYHU\HDU7KLVSHUIRUPDQFHUHƮHFWVWKHVLJQLƬFDQWRSHUDWLRQDOLPSURYHPHQWV ZHPDGHDFURVVPDQ\RIRXUEXVLQHVVHV,QWKHIRXUWKTXDUWHURIƬVFDOZHVDZ\HDURYHU\HDU H[SDQVLRQRIRSHUDWLQJPDUJLQVLQHYHU\RQHRIRXUEXVLQHVVHVIRUWKHƬUVWWLPHLQPDQ\\HDUV $WWKHVDPHWLPHWKHVLJQLƬFDQWRSHUDWLRQDOLPSURYHPHQWVZHoYHPDGHKDYHDOORZHGXVWRLQYHVW LQWKHFULWLFDOLQQRYDWLRQWKDWLVWKHIRXQGDWLRQRI+3oVIXWXUH:HJUHZRXU\HDURYHU\HDUUHVHDUFK DQGGHYHORSPHQWVSHQGE\DQGZHLQFUHDVHGLQYHVWPHQWLQHYHU\VHJPHQWLQFOXGLQJLQYHVWPHQWV LQFORXGLQIUDVWUXFWXUH'SULQWLQJDQGDQHQWLUHO\QHZDUFKLWHFWXUHIRUFRPSXWLQJWKDWZHFDOO 7KH0DFKLQH 2YHUDOOWKHSURJUHVVZHoYHPDGHLQRXUWXUQDURXQGGURYHDVLJQLƬFDQWLQFUHDVHLQVWRFNKROGHUYDOXH WKURXJKRXWƬVFDO\HDUVDQG Separation 2QHRIWKHPRVWLPSRUWDQWGHFLVLRQVZHPDGHLQƬVFDOZDVWRUHGHƬQHWKHIXWXUHRIRXUFRPSDQ\E\ VHSDUDWLQJ+3LQWRWZRLQGHSHQGHQWSXEOLFO\WUDGHGFRPSDQLHV7KHZRUNZHoYHGRQHWRVWUHQJWKHQRXU FRUHEXVLQHVVHVHQDEOHVXVWRWDNHWKLVVWHSWRDFFHOHUDWHWKHSURJUHVVZHoYHPDGHLQRXUWXUQDURXQG Hewlett-Packard EnterpriseZLOOEHDOHDGHULQWKHQH[WJHQHUDWLRQRIWHFKQRORJ\LQIUDVWUXFWXUH VRIWZDUHVHUYLFHVDQGFORXGVROXWLRQVWKDWKHOSHQWHUSULVHFXVWRPHUVHPEUDFHWKH1HZ6W\OHRI,7DQG EXLOGDFRPSHWLWLYHDGYDQWDJH:HDUHWKHRQO\FRPSDQ\WKDWFDQGHOLYHUDFURVVWKHVHHVVHQWLDOIRXU HOHPHQWVDWVFDOH 1 HP Inc.ZLOOEHDOHDGLQJSHUVRQDOV\VWHPVDQGSULQWLQJFRPSDQ\GHOLYHULQJLQQRYDWLRQVtIURP' SULQWLQJWRQHZFRPSXWLQJH[SHULHQFHVtWKDWZLOOHPSRZHUSHRSOHWRFUHDWHLQWHUDFWDQGLQVSLUHOLNH QHYHUEHIRUH 7KHGHFLVLRQWRVHSDUDWHUHƮHFWVRXUEHOLHIWKDW+3PXVWDFWZLWKJUHDWHUVSHHGDQGDJLOLW\WRFRPSHWH DQGZLQLQDZRUOGZKHUHWHFKQRORJLHVPDUNHWVDQGFXVWRPHUH[SHFWDWLRQVDUHFKDQJLQJIDVWHUWKDQ HYHU,WLVFOHDUWRXVWKDWZHFDQEHPRUHQLPEOHDQGPRUHVXFFHVVIXODVWZRFRPSDQLHVWKDQDVRQH 7KHUHVXOWZLOOEHWZRLQGXVWU\OHDGLQJ)RUWXQHFRPSDQLHVSRVLWLRQHGWRPHHWRXUFXVWRPHUVo UDSLGO\FKDQJLQJQHHGV(DFKZLOOKDYHWKHLQGHSHQGHQFHIRFXVƬQDQFLDOUHVRXUFHVDQGƮH[LELOLW\WR UHVSRQGWRDFRQVWDQWO\HYROYLQJPDUNHWZKLOHJHQHUDWLQJORQJWHUPYDOXHIRUVWRFNKROGHUV&XVWRPHUV DQGSDUWQHUVZLOOEHQHƬWIURPGRLQJEXVLQHVVZLWKVLPSOHUDQGPRUHDJLOHRUJDQL]DWLRQV,QYHVWRUVZLOO EHQHƬWIURPWZRGLVWLQFWLQYHVWPHQWRSSRUWXQLWLHVHDFKZLWKDQHQKDQFHGIRFXVRQORQJWHUPJURZWK DQGSURƬWDELOLW\ :HH[SHFWWKHVHSDUDWLRQWREHFRPSOHWHGE\WKHHQGRIRXUƬVFDO Accelerating Innovation 2XUIXWXUHGHSHQGVRQWKHNLQGRIJURXQGEUHDNLQJLQQRYDWLRQWKDWKDVEHHQWKHKDOOPDUNRI+3VLQFH LWVLQFHSWLRQ\HDUVDJR:HHQWHUHGƬVFDOZLWKWKHJRDORIDFFHOHUDWLQJRXULQQRYDWLRQHQJLQH DQGZHGLGMXVWWKDW7KHH[FLWLQJQHZSURGXFWVDQGVHUYLFHVZHDQQRXQFHGDFURVVRXUEXVLQHVVJLYHXV $5.9B WKHVWURQJHVWSRUWIROLRZHoYHKDGLQDGHFDGH LQRSHUDWLQJ $JRRGH[DPSOHLVHP HelionDSRUWIROLRRIFORXGSURGXFWVDQGVHUYLFHVWKDWHQDEOHRUJDQL]DWLRQV WREXLOGPDQDJHDQGFRQVXPHZRUNORDGVLQK\EULG,7HQYLURQPHQWV7KLVSDVWIDOOZHDQQRXQFHG FRPSDQ\ FRPPHUFLDODYDLODELOLW\RI+3+HOLRQ2SHQ6WDFNDQGWKH+3+HOLRQ'HYHORSPHQW3ODWIRUPDQGZH QHWFDVK IXUWKHUVWUHQJWKHQHG+3+HOLRQZLWKWKHDFTXLVLWLRQRI(XFDO\SWXV :HLQWURGXFHGWKHHP ApolloIDPLO\RIKLJKSHUIRUPDQFHFRPSXWLQJV\VWHPVFDSDEOHRIGHOLYHULQJXS WRIRXUWLPHVWKHSHUIRUPDQFHRIVWDQGDUGUDFNVHUYHUVZKLOHXVLQJOHVVVSDFHDQGHQHUJ\7KLVLQFOXGHV WKH+3$SROOR6\VWHPDQLQGXVWU\ƬUVWOLTXLGFRROHGVXSHUFRPSXWHUWKDWFRPELQHVKLJKOHYHOVRI SURFHVVLQJSRZHUZLWKXOWUDORZHQHUJ\XVDJH :HH[WHQGHGRXUConverged StorageSRUWIROLRZLWKDVROLGVWDWHRSWLPL]HGDOOƮDVKHP 3PAR StoreServ system,WGHOLYHUVSHUIRUPDQFHDQGORZODWHQF\ZLWKRXWFRPSURPLVLQJHQWHUSULVHUHVLOLHQF\RUDGGLQJ GDWDFHQWHUFRPSOH[LW\ ,Q$XJXVWZHDQQRXQFHGRXUQHZSRUWIROLRRIHP ProLiant Gen 9 Servers7KHVHVHUYHUVDUHRSWLPL]HG IRUFRQYHUJHQFHFORXGDQGVRIWZDUHGHƬQHGHQYLURQPHQWVDQGGHOLYHUƮH[LEOHVFDODEOHFRPSXWLQJ UHVRXUFHVWKDWDUHDOLJQHGWRFXVWRPHUVoEXVLQHVVJRDOV ,Q2FWREHUZHDQQRXQFHGRXUYLVLRQIRUWKHBlended Reality EcosystemtWKHIXWXUHRIFRPSXWLQJDQG 'SULQWLQJWKDWLVFKDQJLQJKRZZHLQWHUDFWZLWKWHFKQRORJ\DQGWKHZRUOGDURXQGXV7KHƬUVWSURGXFW WRVXSSRUWRXUYLVLRQLVSprout by HPDƬUVWRILWVNLQG,PPHUVLYH&RPSXWLQJSODWIRUPWKDWUHGHƬQHV WKHXVHUH[SHULHQFHE\DOORZLQJXVHUVWRHDVLO\EULQJWKLQJVIURPWKHSK\VLFDOZRUOGLQWRWKHGLJLWDO ZRUOGWRPDQLSXODWHPRUSKDQGPRGLI\ZLWKRXWNH\ERDUGVDQGPLFH:LWK6SURXWZHoUHFRPELQLQJ WKHSRZHURIDQDGYDQFHGGHVNWRSFRPSXWHUZLWKDVFDQQHUGHSWKVHQVRUKLUHVROXWLRQFDPHUDDQG SURMHFWRULQWRRQH :HDOVRXQYHLOHGHP Multi Jet FusionvDUHYROXWLRQDU\'SULQWLQJWHFKQRORJ\OHYHUDJLQJRXU\HDUV RISULQWOHDGHUVKLSDQGLQWHOOHFWXDOSURSHUW\WRDOORZIRUIXQFWLRQDOSDUWVWREHSULQWHGWLPHVIDVWHU WKDQWKHIDVWHVW'SULQWLQJWHFKQRORJ\RQWKHPDUNHWWRGD\ZLWKEHWWHUTXDOLW\DQGORZHUFRVW ,Q'HFHPEHUZHLQWURGXFHGHP HAVEn OnDemandZKLFKJLYHVRUJDQL]DWLRQVFORXGEDVHGDFFHVVWR RXUZRUOGFODVVDQDO\WLFVSODWIRUP5XQQLQJRQ+3+HOLRQ+3+$9(Q2Q'HPDQGHQDEOHVFXVWRPHUVWR DQDO\]HDOOIRUPVRIGDWDLQFOXGLQJEXVLQHVVGDWDPDFKLQHGDWDDQGXQVWUXFWXUHGKXPDQLQIRUPDWLRQ 'HYHORSHUVFDQDOVROHYHUDJHWKLVLQQRYDWLYHZHEVHUYLFHDVZHOODVHQJDJHZLWKDUREXVWDQGJURZLQJ FRPPXQLW\WRFUHDWHQH[WJHQHUDWLRQDSSOLFDWLRQVDQGVHUYLFHV :HoUHQRWMXVWWKLQNLQJDERXWQHZSURGXFWVDQGVHUYLFHVZHoUHDOVRWKLQNLQJDERXWWKHIXWXUHRI FRPSXWLQJLWVHOI,QDQHƫRUWOHGE\WKHWDOHQWHGUHVHDUFKHUVDW+3/DEVLQ-XQHZHDQQRXQFHGD UHYROXWLRQDU\QHZFRPSXWLQJDUFKLWHFWXUHDQGRXUODUJHVWUHVHDUFKSURMHFWFDOOHGThe Machine ZKLFKZLOOHQDEOHDVLJQLƬFDQWOHDSLQSHUIRUPDQFHDQGHƫLFLHQF\ZKLOHORZHULQJFRVWVDQGLPSURYLQJ VHFXULW\$OWKRXJKZHGRQoWH[SHFWWRVHHDVSHFLƬFSURGXFWIRUWKHQH[WWKUHHWRƬYH\HDUVZHDUH DOUHDG\IROGLQJVRPHRIWKHFRPSRQHQWWHFKQRORJLHVLQWRXSFRPLQJSURGXFWURDGPDSV7KH0DFKLQH LVDSHUIHFWH[DPSOHRIWKHLQFUHGLEOHRQJRLQJLQQRYDWLRQDW+3WKDWZLOOKHOSGHƬQHWKHWHFKQRORJ\ ODQGVFDSHIRUPDQ\\HDUVWRFRPH %XW+3LVDERXWPRUHWKDQLQQRYDWLRQ:HDUHDOVRSDUWQHUVWRPDQ\RIWKHZRUOGoVODUJHVWDQGPRVW $3.9B UHVSHFWHGFRPSDQLHVDQGLQVWLWXWLRQV+3(QWHUSULVH6HUYLFHVZRUNVZLWKFXVWRPHUVWRGULYHEHWWHU UHWXUQHGWR RXWFRPHVIRUEXVLQHVVHVHPSOR\HHVDQGFLWL]HQVDURXQGWKHJOREH:HKHOSDLUOLQHVUXQVDIHO\SHQVLRQ DQGKHDOWKFDUHV\VWHPVIXQFWLRQVPRRWKO\DQGVHFXUHWULOOLRQVRIGROODUVLQƬQDQFLDOWUDQVDFWLRQV VWRFNKROGHUV HYHU\GD\2XUGHGLFDWLRQWRWKHVXFFHVVRIRXUFXVWRPHUVKDVPRVWUHFHQWO\HDUQHGXVWKHKLJKHVW1HW LQWKHIRUP 3URPRWHU6FRUHLQWKH,7VHUYLFHVLQGXVWU\LQFUHDVLQJRYHU:HDUHHQRUPRXVO\SURXGRIWKH FRQWULEXWLRQ+3(QWHUSULVH6HUYLFHVPDNHVWRWKHIDEULFRISHRSOHoVOLYHV RIGLYLGHQGV The Year Ahead DQGVKDUH 'XULQJWKHSDVWWKUHH\HDUVZHKDYHGRQHDJRRGMRERIDGGUHVVLQJWKHIXQGDPHQWDOVtLPSURYLQJ UHSXUFKDVHV ƬQDQFLDOSHUIRUPDQFHLQFUHDVLQJEXVLQHVVHƫLFLHQF\IXHOLQJLQQRYDWLRQVWUHQJWKHQLQJRXUFXVWRPHU DQGSDUWQHUUHODWLRQVKLSVDQGHQJDJLQJRXUHPSOR\HHV$VZHHQWHUWKHIRXUWK\HDURIRXUWXUQDURXQG ZHDUHGHWHUPLQHGWRDFFHOHUDWHWKHSURJUHVVZHoYHPDGH )LVFDOZLOOEHDGHƬQLQJ\HDUIRU+32XUFKDOOHQJHtDQGRXURSSRUWXQLW\tLVWRWDNHRXU SHUIRUPDQFHWRWKHQH[WOHYHOZKLOHH[HFXWLQJWKHVHSDUDWLRQ:HDUHGHWHUPLQHGQRWWRVNLSDEHDW LQƬVFDO:KLOHVHSDUDWLQJVXFKDODUJHJOREDOFRPSDQ\LVDFRPSOH[WDVNZHKDYHSXWLQSODFHD FRPSUHKHQVLYHSODQWRHQVXUHRXUVXFFHVV )RUDOORXUSURJUHVVZHVWLOOKDYHSOHQW\RIURRPIRULPSURYHPHQW,oYHDOZD\VVDLGWKDWWXUQDURXQGV DUHQoWOLQHDU:KLOHZHDUHVHHLQJFOHDUSRFNHWVRIJURZWKRWKHUDUHDVVWLOOQHHGPRUHZRUN7KLV PHDQVWKDWRXUDELOLW\WRH[HFXWHKDVQHYHUEHHQPRUHLPSRUWDQW7KHPRUHZHDFKLHYHLQƬVFDO DVRQHFRPSDQ\WKHPRUHVXFFHVVIXO+HZOHWW3DFNDUG(QWHUSULVHDQG+3,QFZLOOEHZKHQWKH\ EHFRPHLQGHSHQGHQW $IWHUPRUHWKDQWKUHH\HDUVDW+3,oPPRUHFRQƬGHQWWKDQHYHUWKDWZHoUHGRLQJWKHULJKWWKLQJVWR LPSURYHWKHYDOXHZHGHOLYHUWRFXVWRPHUVDQGSDUWQHUVLQFUHDVHUHWXUQVIRUVWRFNKROGHUVDQGEHFRPH WKHHPSOR\HURIFKRLFHLQWKHWHFKQRORJ\LQGXVWU\ :HDSSUHFLDWHWKHOR\DOW\RIRXUFXVWRPHUVSDUWQHUVVWRFNKROGHUVDQGHPSOR\HHV:HZLOOFRQWLQXH WRGRHYHU\WKLQJZHFDQWRHDUQ\RXUWUXVWDQG\RXUFRQƬGHQFHDQGORRNIRUZDUGWRGHOLYHULQJRQRXU FRPPLWPHQWVDQGH[SHFWDWLRQVLQƬVFDODQGEH\RQG 6LQFHUHO\ 0HJ:KLWPDQ 5HYHQXHRQDFRQVWDQWFXUUHQF\EDVLVDVVXPHVQRFKDQJHLQWKHIRUHLJQH[FKDQJHUDWHIURPWKHSULRU\HDUSHULRG 2SHUDWLQJFRPSDQ\QHWFDVKLVDQRQ*$$3PHDVXUHWKDWLVGHƬQHGDVWRWDOFRPSDQ\QHWFDVKOHVV+3)LQDQFLDO6HUYLFHV p+3)6q QHWFDVK7RWDOFRPSDQ\QHW FDVKFRQVLVWVRIWRWDOFRPSDQ\JURVVFDVKZKLFKLQFOXGHVFDVKDQGFDVKHTXLYDOHQWVVKRUWWHUPLQYHVWPHQWVDQGFHUWDLQOLTXLGORQJWHUPLQYHVWPHQWVOHVVWRWDO FRPSDQ\JURVVGHEWZKLFKLQFOXGHVWKHHƫ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