Hewlett-packard Co has a market cap of $27.56 billion; its shares were traded at around $13.97 with a P/E ratio of 3.4 and P/S ratio of 0.2. The dividend yield of Hewlett-packard Co stocks is 3.8%. Hewlett-packard Co had an annual average earning growth of 12% over the past 5 years.
Highlight of Business Operations:We review goodwill and purchased intangible assets with indefinite lives for impairment annually and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The provisions of the accounting standard for goodwill and other intangibles allows us to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. For our annual goodwill impairment test in the fourth quarter of fiscal 2012, we performed a quantitative test for all of our reporting units. Due to the recent trading values of our stock price, we believed it was appropriate to have recent fair values for each of our reporting units in order to assess the reasonableness of the sum of these fair values as compared to our market capitalization. In the first step, we compare the fair value of each reporting unit to its carrying value. We determine the fair value of our reporting units using a weighting of fair values derived most significantly from the income approach and to a lesser extent the market approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability of these publicly-traded companies to the reporting unit. When market comparables are not meaningful or not available, we may estimate the fair value of a reporting unit using only the income approach. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the
Our effective tax rates were (6.0)%, 21.2% and 20.2% in fiscal 2012, 2011 and 2010, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from our operations in lower-tax jurisdictions throughout the world. The jurisdictions with favorable tax rates that have the most significant effective tax rate impact in the periods presented include Singapore, the Netherlands, China, Ireland and Puerto Rico. We plan to reinvest some of the earnings of these jurisdictions indefinitely outside the United States and therefore have not provided U.S. taxes on those indefinitely reinvested earnings.
Software net revenue increased 20.6% (21.3% when adjusted for currency) in fiscal 2012 due to revenues from acquired companies, primarily Autonomy, which was acquired in October, 2011. In fiscal 2012, net revenue from services, support and licenses increased by 71%, 16% and 8%, respectively.
Software net revenue increased 19.7% (18.1% when adjusted for currency) in fiscal 2011 due to revenues from acquired companies as well as growth in the organic business. The revenue growth was driven by good performance from our security and management suite offerings. In fiscal 2011, net revenue from services, licenses and support increased by 26%, 23% and 16%, respectively.
(1)Portfolio assets include gross financing receivables of approximately $7.7 billion and $7.3 billion at October 31, 2012 and October 31, 2011, respectively, and net equipment under operating leases of $2.4 billion and $2.7 billion at October 31, 2012 and October 31, 2011, respectively, as disclosed in Note 11 to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Portfolio assets also include capitalized profit on intercompany equipment transactions of approximately $0.9 billion and $1.0 billion at October 31, 2012 and October 31, 2011, respectively, and intercompany leases of approximately $2.1 billion and $1.7 billion at October 31, 2012 and October 31, 2011, respectively, both of which are eliminated in consolidation. (2)Allowance for doubtful accounts includes both the short-term and the long-term portions of the allowance on financing receivables. (3)HPFS debt consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt and debt issued directly by HPFS. At October 31, 2012 and 2011, debt allocated to HPFS totalled $11.3 billion and $10.8 billion, respectively. The allocated intercompany debt to equity ratio above is comparable to that of other similar financing companies.
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