HP Bids for Autonomy to Improve on Q3 Results and Eliminates PC and webOS Hardware

HP to Acquire Leading Enterprise Information Management Software Company Autonomy Corporation plc

Highly complementary acquisition provides leadership position in large and growing space

Expected to be accretive to non-GAAP earnings per share for HP shareholders in the first full year following completion(1)

PALO ALTO, Calif., and CAMBRIDGE, England, Aug. 18, 2011 - HP (NYSE: HPQ) and Autonomy Corporation plc (LSE: AU. or AU.L) today announced the terms of a recommended transaction under which HP (through an indirect wholly-owned subsidiary, HP SPV) will acquire all of the outstanding shares of Autonomy for £25.50 ($42.11) per share in cash (the “Offer”). The transaction was unanimously approved by the boards of directors of both HP and Autonomy. The Autonomy board of directors also has unanimously recommended its shareholders accept the Offer.

Based on the closing stock price of Autonomy on August 17, 2011, the consideration represents a one day premium to Autonomy shareholders of approximately 64 percent and a premium of approximately 58 percent to Autonomy’s prior one month average closing price. The transaction will be implemented by way of a takeover offer extended to all shareholders of Autonomy. A document containing the full details of the Offer will be dispatched as soon as practicable after the date of this release. The acquisition of Autonomy is expected to be completed by the end of calendar 2011.

Founded in 1996, Autonomy is a global leader in infrastructure software for the enterprise with a customer base of more than 25,000 global companies, law firms and public sector agencies, and approximately 2,700 employees worldwide. Autonomy’s Intelligent Data Operating Layer (IDOL) platform allows computers to harness the richness of information, forming a conceptual and contextual understanding of any piece of electronic data, including unstructured information, such as text, email, web pages, voice and video. Autonomy’s software powers a full spectrum of mission-critical enterprise applications, including pan-enterprise search, customer interaction solutions, information governance, end-to-end eDiscovery, records management, archiving, business process management, web content management, web optimization, rich media management and video and audio analysis. Autonomy’s IDOL is the de-facto standard among more than 400 OEMs, supported by substantial intellectual property (IP), and Autonomy is a significant cloud player with over 30 petabytes of customer information under management. Autonomy’s recent operating and financial performance has been strong, including its most recent results for the quarter ending June 30, 2011. Over the last five years, Autonomy has grown its revenues at a compound annual growth rate of approximately 55 percent and adjusted operating profit at a rate of approximately 83 percent.

“Autonomy presents an opportunity to accelerate our strategic vision to decisively and profitably lead a large and growing space,” said Léo Apotheker, HP president and chief executive officer. “Autonomy brings to HP higher value business solutions that will help customers manage the explosion of information. Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected. Autonomy has an attractive business model, including a strong cloud based solution set, which is aligned with HP’s efforts to improve our portfolio mix. We believe this bold action will squarely position HP in software and information to create the next-generation Information Platform, and thereby, create significant value for our shareholders.”

Apotheker continued, “Autonomy is a highly profitable and globally respected software company, with a well-regarded management team and talented, dedicated employees. We look forward to partnering with a company who shares our commitment to solving customer problems by creating smart, cutting-edge products and solutions. I am particularly pleased that Dr. Mike Lynch, who heads a team of brilliant scientists and employees, will continue to lead Autonomy. I look forward to our collaboration as we focus on creating maximum value for the combined company, its customers and employees.” “This is a momentous day in Autonomy’s history,” said Dr. Mike Lynch, chief executive officer and founder, Autonomy. “From our foundation in 1996, we have been driven by one shared vision: to fundamentally change the IT industry by revolutionizing the way people interact with information. HP shares this vision and provides Autonomy with the platform to bring our world-leading technology and innovation to a truly global stage, making the shift to a future age of the information economy a reality.”

Strategic and financial benefits

• Positions HP as leader in large and growing space: Autonomy has a strong position in the $20 billion enterprise information management space, which is growing at 8 percent annually and is uniquely positioned to continue growth within this space. Furthermore, key Autonomy assets would provide HP with the ability to reinvent the $55 billion business analytics software and services space, which is growing at 8 percent annually.
• Complements HP’s existing technology portfolio and enterprise strategy: Autonomy offers solutions that are synergistic across HP’s enterprise offerings and strengthens capabilities for data analytics, the cloud, industry capabilities and workflow management. This will bolster HP’s cloud offerings with key assets for information management and data analytics. Autonomy also complements existing HP offerings from enterprise servers, storage, networking, software, services and its Imaging and Printing Group (IPG).
• Provides differentiated IP for services and extensive vertical capabilities in key industries: Acquiring Autonomy would provide differentiated IP for services, including extensive vertical capabilities in key industries such as government, financial services, legal, pharmaceutical and healthcare.
• Provides IPG a base for content management platforms: Autonomy provides HP with a content management platform and accelerates a major component of the IPG enterprise strategy to continue its growth of document and content management and higher value commercial printing opportunities.
• Enhances HP’s financial profile: Autonomy’s strong growth and profit margin profile complements HP’s efforts to improve its business mix by focusing on enterprise software and solutions. Autonomy has a consistent track record of double-digit revenue growth, with 87 percent gross margins and 43 percent operating margins in calendar year 2010.(2)
• Accretive to HP’s earnings: HP expects the acquisition to be accretive to non-GAAP earnings per share for HP shareholders in the first full year following completion.(3) Lynch will continue to lead Autonomy and will report to Apotheker. Following the acquisition, Autonomy will operate separately. The Offer documents related to the transaction are available at www.hp.com/investor/offerdocuments. The Offer will be subject to the conditions and further terms set out in the Offer documents. HP intends to finance the transaction through offshore cash and debt financing. HP Reports Third Quarter 2011 Results and Initiates Company Transformation
• Earnings highlights:
o Third quarter net revenue of $31.2 billion, up 1% from the prior year quarter and down 2% when adjusted for the effects of currency
o Third quarter GAAP diluted earnings per share up 24% with non-GAAP diluted earnings per share up 2% and cash flow from operations of $3.2 billion
o Revising full year FY11 revenue estimates to $127.2 billion to $127.6 billion
o Revising full year FY11 GAAP diluted earnings per share outlook down to between $3.59 and $3.70 and non-GAAP diluted earnings per share outlook down to between $4.82 and $4.86
• Exploring strategic alternatives for Personal Systems Group; shutting down operations for webOS devices and exploring strategic alternatives for webOS software
• Offer to acquire Autonomy, a global leader in infrastructure software for the enterprise, to accelerate expansion in rapidly growing enterprise information management market

PALO ALTO, Calif., Aug 18, 2011 (BUSINESS WIRE) -- HP (NYSE:HPQ) today announced financial results for its third fiscal quarter ended July 31, 2011, as well as the commencement of a company transformation described in detail in separate press releases issued today.

HP unveiled the details of a plan to accelerate the strategy introduced in March. The plan introduced today will:

• Move HP into higher value, higher margin growth categories
• Sharpen HP's focus on its strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets
• Increase investment in innovation to drive differentiation

As part of the transformation, HP announced that its board of directors has authorized the exploration of strategic alternatives for the company's Personal Systems Group. HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction. (See accompanying press release.)

HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward.

In addition, HP announced the terms of a recommended transaction for all of the outstanding shares of Autonomy Corporation plc for £25.50 ($42.11) per share in cash. Autonomy's software powers a full spectrum of mission-critical enterprise applications, including pan-enterprise search, customer interaction solutions, information governance, end-to-end eDiscovery, records management, archiving, business process management, web content management, web optimization, rich media management and video and audio analysis. The addition of Autonomy will accelerate HP's ability to deliver on its strategy to offer cloud-based solutions and software that best addresses the changing needs of businesses. (See accompanying press release.)

"We're focused on improving performance across the business," said Léo Apotheker, HP president and chief executive officer. "HP is taking bold, transformative steps to position the company as a leader in the evolving information economy. Today's announced plan will allow HP to drive creation of long-term shareholder value through a focus on fewer fronts, thereby improving its ability to execute, invest in innovation and drive a higher-margin business mix."

Earnings highlights

For the quarter, net revenue of $31.2 billion was up 1% from the prior-year period as reported and down 2% when adjusted for the effects of currency. GAAP diluted earnings per share (EPS) was $0.93, up 24% from $0.75 in the prior-year period. Non-GAAP diluted EPS was $1.10, up 2% from $1.08 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0.17 per share and $0.33 per share in the third quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

Q3 FY11 Q3 FY10 Y/Y
Net revenue ($B) $31.2 $30.7 1%
GAAP operating margin 8.1% 7.6% 0.5 pts
GAAP net earnings ($B) $1.9 $1.8 9%
GAAP diluted EPS $0.93 $0.75 24%
Non-GAAP operating margin 9.8% 11.2% (1.4) pts
Non-GAAP net earnings ($B) $2.3 $2.6 (11.4%)
Non-GAAP diluted EPS $1.10 $1.08 2%

"Our outlook reflects the challenges that we face across our businesses," said Cathie Lesjak, HP executive vice president and chief financial officer. "Dealing with these challenges will take time, but HP will navigate through the transformation to become a more focused, streamlined company."

Trends and regional performance

HP's Commercial businesses remain healthy with 5% revenue growth year over year. HP's Consumer businesses, within PSG and IPG, were collectively down 15% year over year.

Third quarter revenue was flat year over year in the Americas as well as in Europe, the Middle East and Africa at $14.1 billion and $11.0 billion, respectively. Revenue in Asia Pacific was $6.1 billion, representing a 9% increase year over year. When adjusted for the effects of currency, revenue was down 2% in the Americas, down 5% in Europe, the Middle East and Africa and up 1% in Asia Pacific. Revenue from outside of the United States in the third quarter accounted for 65% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.7 billion, up 12% over the year-ago period, accounting for 12% of total HP revenue.

Business group highlights

• Services revenue grew 4% year over year with a 13.5% operating margin. HP also announced the appointment of John Visentin as the new executive vice president for Enterprise Services reporting to Apotheker.
• Enterprise Servers, Storage and Networking (ESSN)revenue grew 7% year over year with a 13.0% operating margin. Networking was up 15%, Industry Standard Servers was up 9%, Business Critical Systems was down 9%, and HP Storage was up 8%. 3PAR revenue accelerated, with triple-digit year-over-year growth operationally.
• HP Software revenue grew 20% year over year with a 19.4% operating margin. HP Software revenue was driven by strong growth in licenses and services of 29% and 30%, respectively.
• Personal Systems Group (PSG) revenue declined 3% year over year with a 5.9% operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. Commercial Client revenue grew 9% and Consumer Client revenue declined 17%.
• Imaging and Printing Group (IPG) revenue declined 1% year over year with a 14.7% operating margin. Commercial revenue was down 7% year over year with commercial printer hardware units up 1%. Consumer printer hardware revenue was up 1% year over year on 7% unit growth. IPG continued to drive innovation and momentum with digital presses and web-connected printers.
• Financial Services revenue grew 22% year over year with a 9.4% operating margin. Financial Services continued to see its strong performance driven by both double-digit growth in lease volume and a healthy improvement in portfolio assets.

Asset management

HP generated $3.2 billion in cash flow from operations in the third quarter. Inventory ended the quarter at $7.4 billion, with days of inventory flat year over year at 28 days. Accounts receivable of $18.1 billion was up 6 days year over year at 52 days. Accounts payable ended the quarter at $14.5 billion, down 3 days from the prior-year period. HP's dividend payment of $0.12 per share in the third quarter resulted in cash usage of $248 million. HP also utilized $4.6 billion of cash during the quarter to repurchase approximately 128 million shares of common stock in the open market. HP exited the quarter with $13.0 billion in gross cash.

Outlook

For the fourth quarter of fiscal 2011, HP estimates revenue of approximately $32.1 billion to $32.5 billion, GAAP diluted EPS of approximately $0.44 to $0.55, and non-GAAP diluted EPS of approximately $1.12 to $1.16.

Fourth quarter fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.61 to $0.68 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

HP expects full year fiscal 2011 revenue in the range $127.2 billion to $127.6 billion, GAAP diluted EPS of $3.59 to $3.70, and non-GAAP diluted EPS of $4.82 to $4.86.

Full year fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.16 to $1.23 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

HP Appoints New Head of Enterprise Services

PALO ALTO, Calif., Aug. 18, 2011 - HP today announced that it has appointed John Visentin as executive vice president of HP Enterprise Services, effective immediately.

Visentin will be responsible for driving growth in HP Enterprise Services, which delivers technology infrastructure, applications and business services. He will become a member of the company’s Executive Council, reporting directly to Léo Apotheker, HP president and chief executive officer.

“John is a world-class services executive who will accelerate our efforts in delivering high-value services around cloud, security, mobility, application modernization and industry solutions,” said Apotheker. “I am pleased to have John as a member of the Executive Council.”

Visentin previously led HP Enterprise Services for the Americas. He replaces Tom Iannotti, who announced his retirement earlier this year. Prior to joining HP, Visentin held several senior executive positions at IBM. Most recently, he was general manager of IBM Integrated Technology Services for North America. Visentin has spent 27 years in the information technology industry and has extensive experience in managing multibillion dollar business units, sales enablement and brand recognition in the IT services industry.

Visentin holds a Bachelor of Commerce degree from Concordia University in Montreal, Canada, and speaks English, Italian and French.

HP Pairs Style, Performance in New All-in-one Desktop

PALO ALTO, Calif., Aug. 22, 2011 - HP today expanded its Elite business desktop portfolio with the industry’s first all-in-one PC that integrates the power of Intel® second-generation Core™ vPro technology(1) to deliver up to 40 percent better performance, 15 percent faster hard drive access(2) and reduced downtime via remote IT management.

Ideal for enterprise, midmarket and public sector customers, the sleek, space-saving HP Compaq 8200 Elite All-in-One Business Desktop offers robust performance, enterprise security and remote management features, as well as integrated collaboration tools that allow businesses to connect to coworkers at the office, across town or on the other side of the globe.

“Another industry first in our Elite desktop family demonstrates our commitment to engineering excellence and underscores our global leadership in secure, enterprise computing,” said Jeff Groudan, director, Commercial Desktop Marketing, HP. “The HP Compaq 8200 Elite All-in-One delivers outstanding hardware and software innovation to move the needle in the all-in-one category.”

Sleek, flexible design and virtual collaboration tools for business

Featuring an expansive 23-inch diagonal full high-definition(3) LED monitor, the HP Compaq 8200 Elite All-in-One includes an integrated webcam,(4) microphone and speakers for streamlined remote face-to-face communication. SRS Premium Sound is included to deliver a refined audio experience complete with immersive surround sound. It also comes with a one-year HP Virtual Rooms license,(5) allowing businesses to conduct presentations, team meetings, training events and classes in an easy-to-use online conference center.

HP Elite customer support for consistent quality and reliability

The HP Compaq 8200 Elite All-in-One comes with a standard three-year warranty for parts, labor and next-day, on-site service. It delivers premium customer support through HP Total Care and HP Care Pack Services,(6) and offers extended service contracts that go beyond standard warranties to help maximize return on investment.

Customers also can rely on the recently introduced HP Elite Premium Support,(7) which employs a dedicated staff of Elite-accredited technical professionals to provide fast and in-depth problem resolution for the HP Elite family of products.

Intelligent performance, built-in security, maximum configurability

The first all-in-one addition to the HP Compaq 8200 Elite Desktop Series, the HP Compaq 8200 Elite All-in-One supports the latest Intel processors and Intel Q67 Express chipset(1) to intelligently maximize computing performance. It also utilizes Intel Turbo Boost Technology 2.0(8) and Intel Hyper-Threading Technology to improve integrated graphics multitasking.(9)

Easy to deploy and manage, the new HP Compaq 8200 Elite All-in-One is equipped with Intel Standard Manageability and HP BIOS features, as well as Intel vPro technology to enable remote PC management and issue resolution.

The HP Compaq 8200 Elite All-in-One also features an array of advanced HP Elite-class security tools to help protect critical business data, including a standard embedded TPM 1.2 compliant security chip for hardware-based encryption, as well as increased personal encryption through HP’s full suite of HP ProtectTools,(10) including HP DriveLock, HP Digitalpass and HP Face Recognition.

For enterprise customers looking for maximum configurability, data storage and file sharing flexibility, the HP Compaq 8200 Elite All-in-One supports up to 8 GB(11) of DDR3 SDRAM PC3-1333 system memory and includes two memory slots, a mini PCI Express (PCIe) slot and a drive bay. It also offers expanded Solid State Drive (SSD) capacity options for faster data access, quieter and cooler operation, and greater durability than standard hard drives. Elite-standard energy efficiency for a reduced carbon footprint

The HP Compaq 8200 Elite All-in-One is ENERGY STAR® qualified and EPEAT® Silver registered and offers an 89 percent efficient power supply. It also comes preinstalled with HP Power Assistant,(12) is enabled with S3 sleep settings mode and features a holistic thermal design with temperature sensors, fan acceleration and power management settings.

Pricing and availability

The HP Compaq 8200 Elite All-in-One Business PC starts at $999 and is available now in the United States.(13)

HP TouchSmart 9300 Elite qualifies for Microsoft software support

HP also recently announced that the HP TouchSmart 9300 Elite is now qualified under the Microsoft® Compatible Devices Program, supporting versions of Office Communications Server R2 and Lync Server 2010. Additional information is available at http://technet.microsoft.com/lyncdevices.

HP Bids for Autonomy to Improve on Q3 Results and Eliminates PC and webOS Hardware

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