Fenny Bui

1
Hewlett Packard

• Presented by
• Fenny Bui
• Kayla Bui
• Jonathan Lui
• Bang Nguyen
• Thu Pham
• Thu-Thuy Vu

2
HPs History
The 30s

• The 30s Bill Hewlett and Dave Packard meet at
  Stanford.
• The 50s - HP invents the high-speed frequency
  counter (HP 524A) and greatly reduces the time
  required (from about 10 minutes to one or two
  seconds) to measure high frequencies.
• The 70s HP-35 the worlds first scientific
  handheld calculator
• The 90s Entered home-computing market
• The 21st century focuses on reducing the cost
  and complexity o information technology (IT)
  system for business and improving the overall
  experience consumers have with technology.

The 50s
The 70s
The 90s
21st century
3
How does HP do this?

• Information theory
• Quantum Information Processing
• Quantum Science Research
• Computational Bio-Science Research

4
Board of Directors

• Lawrence T Babbio, Jr.
• Phillip M .Condit, Director since 1998.
• Patricia C. Dunn, Director since 1999.
• Carleton S. Fiorina, Director since 1999.
• Sam Ginn, Director since 1996.
• Richard A. Hackborn, Director since 1992.
• George A. Keyworth, Director since 1986.
• Robert E. Knowling, Director since 2000.
• Thomas J. Perkins.
• Lucille S. Salhany.

5
The Top 5 Insider-Shareholders

• Thomas J. Perkins (1,121,248shares)
• Carleton S. Fiorina (352,289 shares)
• Richard A. Hackborn (32,916 shares)
• Robert E. Knowling Jr. (18,798 shares)
• Lucille S. Salhany (16,397 shares)

6
HP's Products
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(No Transcript)
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1st IBM 2nd Dell 3rd HPQ 4th - CAJ
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Growth Rates
STRONG
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Price Ratios
WEAK
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Profit Margin
FAIR
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Financial condition
STRONG
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Investment Returns
STRONG
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Management Efficiency
STRONG
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Capital Structure for 2001 - 2003
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Holding Period Return
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Free Cash Flow
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Discounted Cash Flow

• Ke (required return on equity)
• 2001 -2.38
• 2002 -1.53
• 2003 0.27
• 2004 0.26
• ke0(FCFE1/shares0)/P0 G1

19
Market Efficiency
HP Expands Small and Medium Business Offering
with Fast and Affordable Color LaserJet Printers
NO FORM
01/08/04
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Market Efficiency TAX CUT BILL GOES TO BUSH
05/23/03
SEMI STRONG
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Risk Analysis

• Beta COV(RHPQ, RSP500) / VAR (RSP500)
• 2004 2003 2002 2001
• 1.6573 1.6462 1.5301 1.4885
• Beta_unlevered Equity / (Equity ((1-T)
  Debt)) (BetaEquity)
• 2003 2002 2001
• 0.884628 0.8300337 0.700755435

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Cost of Capital and Optimal Capital Structure
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M M Proposition Chart
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5-year stock price index
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Strength Weakness

• Strengths of HP
• High Sales and EPS
• Low Debt/Equity Ratio
• High gross margin and investment returns
• - High management efficiency
• - Under priced stock
• Extremely high free cash flow
• - Positive HPR
• Weaknesses of HP
• Low Current P/E Ratio
• - High Beta from 2001 to 2004

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Hold, Sell, or Buy HP Stock?
Holding / Buying
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The End