Hewlett Packard

     Hewlett Packard started in 1939 in a garage by two people, Bill Hewlett and

David Packard with just $538 of working capital. After a string of failures,
their companyís first successful product, an audio oscillator better than
anything on the market, earned a U.S. patent and an order from Disney Studios
for eight units to help produce the animated film Fantasia. From 1940 to 1950
they moved from their garage to a rented building on Page Mill Road in Palo Alto
and then constructed their first HP-owned building that was 10,000 square foot.

In 1957, HP had their first public stock offering November 6, 1957 and net
revenues were $30 million with 1,778 employees and 373 products. In the

1960ís, HP was listed on the New York and Pacific exchanges as HWP and had its
first listing on Fortune magazine as of one of the 500 U.S. companies. HP in

1967 started operations in Boeblingen, Germany introducing a non-invasive fetal
heart monitor that helps babies by detecting fetal distress during labor. In the

1970ís revenues increased to $365 million with over 16,000 employees. ( HP.com
) In the 1980ís revenues again increased to $6.5 billion with over 85,000
employees. They introduced their first personal computer, the HP-85 and
introduced HP LaserJet printers, the companyís most successful single product
ever considered a standard for laser printing today. HP moves to the top 50 on

Fortune 500 listing - 1 - at No. 49. Finally in the 1990ís, HP opens research
facilities in Tokyo, Japan with net revenues of $13.2 billion and over 91,000
employees. ( HP.com ) HP also introduced portable computers that lasted on
batteries that would last a flight across the U.S. All these products moved HP
to the No. 2 position in the U.S. market. Today HP has ballooned into a
multinational company with 104 divisions, 123,000 employees worldwide, 19,000
products and sales over $47 billion. ( HP.com ) Great products ultimately come
from the minds of motivated and capable employees, the second key to HPís
success. After the Second World War, the company began to hire talented engineer
and scientist that were no longer working in the war that were from other
technology companies and government funded labs. These were high priced
experienced workers that helped HPís development of different successful
products. ( personal Journal ) The company structure looks like a pyramid. At
the top are the board of directors followed by President and Vice President.

There are Presidents and Vice Presidents in different divisions of the company.

Finally, there are general managers, middle managers, lower managers and
employees. Hewlett Packardís Mission statement is to improve the ways
individuals and organizations around the world create, access, use and
communicate information on the road or from the desktop, in the office and in
the home. HP is a worldwide leader in personal computing; setting new standards
in such areas - 2- as Mobil computing network management, 3-D graphics and
information storage. Computer products include eight manufacturing divisions in

North America, Europe and Asia, with sales and support in more than 110
countries. These divisions are separated in Mobile Computer Division, Business

Desktop Division, Home Products Division, Asia Pacific PC Division, Workstation

Systems Division and information storage group. ( Information Week ) As
explained above HP global market place allows the company to expand in different
countries and people in two ways. First HP.com allows virtually anyone with

Internet access to log on under the URL and actually order online. One problem
that some companies are having is that 65% of the Internet cites are only in

English. ( www.firstsearch.com ) On Hewlett Packardís website you only need to
choose the country that you live in and the pages will translate the text into
that language. There is product information about you future or present
purchases, software updates of the product, and also technical support through
email. Finally HP has 24 hours a day 7 days a week of customer support
throughout the countries that have operators to assist you on the product.

People are more willing to buy products and services from a manufacture that can
provide both the support and the opportunity to buy easily from Hewlett Packard,
and HP provides this! One example is that Dell a online company that build
computer as they are order from the customers and the business offer one of the
best support and - 3 - warranties in the computer industry. HP is following
their online strategy closely to Dellís way of operating the sales and
customers. As this company expands in growth it leaves other smaller companies
behind that canít compete with this computer giant. These smaller companies
have trouble to match HPís prices and customer support. One example of this is
a local owned family shops in a country that are not able to compete with they
type of products and services offered by HP and these companies either have to
stop selling or move away from the competition. With communication and
technology growth, it will be easier to climb the cultural boundaries that other
companies had trouble overcoming in the past. This would be in having other
countries buying an American made product. The Internet is helping in crossing
those boundaries by offering global support and products. With the support and
products offered by HP, other companies may have troubles trying to match or
outperform. This leads to closing down of shops and other smaller retailer that
can affect jobs in that country. People of other diversities may have problem
accepting these changes and may not want to make the change. The older
generation that is not ready or unable to use computers may have troubles
adapting to buying over the Internet. Another problem is not all people from
other countries are financially able to pay for a computer like people in the

U.S. This could be another problem that HP is not yet ready to overcome.

Eventually as time goes on technology will be - 4 - available to all and these
problems might be solved but new problems will replace the old and there will be
other obstacles to avoid. Hewlett Packardís Response to a Globalizing Economy

HP now has a strong commitment to women's advancement. One prime example of this
would be its biannual Technical and Women's Conference, which last year brought
together 2,000 female HP scientists, engineers, professionals and managers from

26 states and 12 countries, in order to discuss business issues, especially as
they relate to gender. HP picked up the tab for employee travel expenses, too.

Work and family issues remain on the front burner as well. Last year the company
was listed as an ABC Champion, leading to the funding of 25 child and elder care
projects in HP communities. The other news here is the ongoing redesign of work
schedules to provide more flexibility. Managers have been trained to be
receptive to these needs while employees have been encouraged to try new
options. As a result, HP has some big numbers to show for its efforts. Nearly

3,000 people work at a "virtual office"; 500 share jobs and 1,450
employees are on compressed workweeks. HP announced on February 28, 2000 that it
would be supplying computers for its "Wired Workforce" program in which
computers are made available for all Delta Air Lines employees at a substantial
discount through PeoplePC. - 5 - The Wired Workforce program was announced

February 4 in a joint presentation with PeoplePC. The San Francisco based
company will be responsible for order fulfillment and technical support for the
program. Over the next few months, Delta Technology and PeoplePC will work
closely to test all aspects of the program, including secure access to the
airline's intranet. HP will provide multiple configurations from its HP Pavilion
desktop line, the No. 1 selling retail PC. HP is moving rapidly forward with
implementation of their 'Wired Workforce' program and look forward to the
advantages their people will gain. In 1997, the HP established a dedicated task
force to address the issues raised by the introduction of a European single
currency (the Euro) for early performance as of January 1, 1999 and during the
transition period through January 1, 2002. HPís primary focus has been on the
changes needed to deal with a mix of Euro and local denomination transactions
from the first day of changeover - January 1, 1999. Since the beginning of the
transition period, product prices in local currencies are being converted to

Euros as required. At an appropriate point during the transition period, product
prices in participating - 6 - countries will be established and stored in Euros,
and converted to local denominations. System changes were implemented to give
multi-currency capability to the few internal applications that did not have it
yet, or to ensure that external partners facing systems processing euro
conversions be compliant with the European council regulations. ( Advertising

Age ) The HP has developed plans to support display and printing of the Euro
character by impacted products. Most products are currently able to do these
functions while plans are still in process for a few remaining products. HP does
not presently expect that introduction and use of the Euro will materially
affect the Company's foreign exchange and escaping activities or the Company's
use of derivative instruments. HP management does not expect that the
introduction of the Euro will result in any material increase in costs to the

Company and all costs associated with the introduction of the Euro will be
expensed to operations as incurred. While the HP will continue to evaluate the
impact of the Euro introduction over time, based on currently available
information, management does not believe that the introduction of the Euro
currency will have a material adverse impact on the HP's financial condition or
overall trends in results of operations. - 7 - Hewlett Packardís Response to a

Globalizing Political Environment Economic, political and other risks associated
with international sales and operations, particularly in Korea and Japan, could
negatively affect HP sales. They sell products worldwide, their business is
subject to risks associated with doing business internationally. HPís net
revenue originating outside the United States, as a percentage of our total net
revenue, was 54.4% in fiscal year 1998 and 54.9% for the nine months ended July

31, 1999. They predict that revenue from international operations will continue
to represent a large portion of our total revenue. In addition, many of their
manufacturing facilities and suppliers are located outside the United States. HP
does a substantial portion of their business in Korea and Japan, which have been
subject to increased economic instability in recent years. Their business has
declined in 1998 when Korea and Japan experienced economic difficulties. The
return of weakness in these economies or weakness in other international
economies could and may have a significant negative effect on HPís future
operating results. HP is dealing with various rules and regulations, in
particular is its compliance with the Food and Drug Administration regarding
regulations on a wide variety of product activities from design and development
to labeling, manufacturing, promotion, sales and distribution. - 8 - The medical
device products produced by Hipís healthcare solutions business are subject to
those standards given by the United States Food and Drug Administration (FDA)
and similar international agencies. HP has received a warning letter from the

FDA in 1996 alleging non-compliance with the FDA's quality system regulations at
one of our facilities. The FDA's quality systems regulation includes elaborate
design, testing, control, documentation and other quality assurance
requirements. HP had to apply considerable resources to address the FDA's
concerns. HP has resolved the issues identified in the FDA's letter and the FDA
is satisfied with our assessment If HP fails to keep up acceptable compliance
with the FDA's quality system and other regulations, HP will be forced to recall
products and cease their manufacture and distribution. ( Hoovers.com ) The

Global Industry The worldwide personal computer industry grew 21 percent last
year, led by strong demand in the United States. Increasing affordability of PCs
and the growing demand to get " online ", the percentage of U.S. homes with

PCs advanced from 38.5% in 1995 to 52.7% in 1999. As a computer Industry as a -

9 - whole had to compete for DRAM in late 1999 because of the Taiwan earthquake.

Prices doubled 100% in August and then again in September. This suspended the
demand in PCs during the holiday season. In entry-level computer HP was again
behind IBM with 12% of market share compared to IBMís 21%. HP has gained
market share in the midrange PCs with 21% compared to IBMís 23%. ( Standard
& Poors ) HP grew in market share during the end of 1999 from 6.2% to 8.4%.

HPís growth rate worldwide is 39.6%, which is the second fastest growth rate
behind Dell computer. In revenues HP is 2nd behind IBM with $47 billion and 2nd
again in net income behind IBM with $2.9 billion. Under operating profit margins

HP ranked 6th with 8.16%and with return in capital of 15.51% also 6th in the
industry. ( Moodyís Industry Review ) One thing that HP does lack in is in
computer sales in other countries outside of the U.S., like Canada where they
are not even ranked in the top 5. Globally HP leads the printer market with
their HP inkjet printers and is gaining market share in the PCs. HP is growing
rapidly into the worldwide market and is growing at a faster rate than before
because of the global access offered to business and customers over the

Internet. - 10 -


Global Computer Industry, New York Times, New York; Jan 29, 1999; Late

Edition; pg.C.18 Hoovers Online Business Network; computer industry analysis;
hoovers.com Tobi Elkin; Advertising Age, Chicago; Jan 31, 2000; Vol. 71, Iss. 5;

Midwest region edition; pg. 32, 3 pgs Laabs, Jennifer J. (1993), " Hewlett

Packardís core values drive HR strategy, "Personal Journal, 72, 9 (February)

38-48 " History, " (2000), http://www.hp.com (accessed 2-9-00) "Hewlett

Packard Company " (2000), http://www.firstsearch.oclc.org (accessed 2-9-2000)

Korzenowski, Paul (1999), " Hewlett Packard Makeover Starts Turning Heads, "

InformationWeek, 761, 9 (February) 189-192 Moodyís Industry review (1999), "

Comparative Rankings. " " Computer Hardware, " (1999), Standards and Poors

Lazich S. Robert; Market Share Reporter, (1999) pg 190-192 - 11 -