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Hewlett-Packard Co. (NYSE:HPQ)

2012 Annual Meeting of Stockholders

March 21, 2012 5:00 pm ET

Executives

Raymond J. Lane - Executive Chairman

David W. Healy - Interim General Counsel

Paul T. Porrini -

Margaret C. Whitman - Chief Executive Officer, President and Director

William Marsh -

Raymond J. Lane

Good afternoon. We're glad you all could join us for HP's 2012 Annual Meeting of Stockholders. The meeting is now called to order. I'm Ray Lane, Chairman of the Board of Hewlett-Packard. I'm joined on stage by Meg Whitman, Chief Executive Officer; Cathie Lesjak, who's our Chief Financial Officer; Dave Healy, who's our acting General Counsel; and Paul Porrini, Assistant Secretary of HP. Other HP officers are here today and are seated in the front rows. Could you all please stand? Where are the -- oh, here we are. Now you're kind of mixed around, it looks like. If you all stand and just be recognized. So let me -- just remain standing and you can wave when I call your name because we want you to know everybody here. Dave Donatelli, who's Executive Vice President and General Manager, Enterprise Server, Storage Networking and Technology Services; Henry Gomez, Executive Vice President and Chief Communications Officer; John Hinshaw, Executive Vice President of Global Technology and Business Processes; Tracy Keogh, who's Executive Vice President of Human Resources; Bill Vegthe, who's the Chief Strategy Officer and Executive Vice President of HP Software; John Visentin, who's Executive Vice President of Enterprise Services; John McMullen, Senior Vice President and Treasurer; and Jim Murrin, Senior Vice President and Comptroller. I saw Tony Prophet stand up, too. Tony, take a bow, okay.

So let me also ask all of the director nominees who are here today, all 11 are here today. So let me ask all of you to stand up, and I won't recognize you since we're going to name you for election to be elected later. So these are all the director nominees.

Okay, now, I'd like to turn it over to Dave Healy, who will make several announcements related to this meeting.

David W. Healy

Thank you, Ray. We are conducting the meeting in accordance with HP's bylaws and meeting rules. You have been provided with an agenda outlining the order of business for today's meeting, as well as the meeting rules. In order to ensure that the business of the meeting proceeds in an orderly fashion, we ask that you please observe the meeting rules. There's one stockholder proposal to be voted upon at the meeting. The proponent of that proposal will be given the opportunity to present his proposal. He’ll be asked to limit his presentation to no more than 5 minutes. Stockholders -- stockholder proposals from the floor will not be accepted.

Please note that we will conduct a question-and-answer section later in the meeting prior to the closing of the polls. We will impose a time limit of 2 minutes per speaker, and there will be a limit of 6 minutes per general topic. We ask that you hold any questions until the Q&A session begins.

Now I would like to read a very brief legal disclaimer. It is possible that some of our comments and some of our responses to your questions may include forward-looking statements that are based on certain assumptions and subject to a number of risks and uncertainties. The risks, uncertainties and assumptions that could affect these forward-looking statements include risks that are described in HP's SEC reports, including our 2011 Form 10-K and our first quarter 2012 Form 10-Q.

Paul Porrini will now make several additional announcements related to the meeting and describe the business items on the agenda. Paul?

Paul T. Porrini

Thank you, Dave. HP's agents have certified that notice of the meeting was provided starting on February 3, 2012, to all stockholders of record as of the record date for the meeting, and copies of those certifications are in the possession of the Assistant Secretary. I, therefore, declare that the legal notice of the meeting has been duly given. The Board of Directors has appointed Bill Marsh of IVS Associates to serve as our inspector of election for this meeting. He is present at the meeting today and sitting here to my left.

As required by law, Bill has taken and signed an oath as inspector of election. This document will be filed with the minutes of today's meeting. Inspector of election has informed me that a majority of the outstanding shares held of record as of the close of business on January 23, the record date for this meeting, are represented at the meeting. I declare, therefore, that there is a quorum present, that we may proceed with the business of the meeting. Please address any questions about voting your proxy, voting instruction card or ballot to the inspector of elections seated at the inspector's table. I will now describe the items of business to be conducted at this meeting.

There are 4 business items on the agenda. In accordance with HP's bylaws, these are the only proposals to be voted upon at this meeting. The first item of businesses is to vote on a slate of 11 nominees to the Board of Directors. The 11 persons who have been nominated to serve on the Board of Directors and who will be voted upon today are: Marc Andreesen, Shumeet Banerji, Rajiv Gupta, John Hammergren, Ray Lane, Ann Livermore, Gary Reiner, Pat Russo, Ken Thompson, Meg Whitman and Ralph Whitworth. Their biographies are in your proxy statements, so I won't review them in detail here.

The second item of business is the ratification of the appointment of Ernst & Young as the independent registered public accounting firm for the company for fiscal 2012. At this time, I'd like to acknowledge Kevin Asher and Brian Outland, representatives of Ernst & Young, who are here at the meeting today. Ernst & Young was responsible for the HP audit for the 2011 fiscal year.

The third item of business is an advisory vote on HP's executive compensation. The description of that item of business is in your proxy statements, so I won't review it in detail here.

The fourth item of business is a stockholder proposal entitled "Executives to Retain Significant Stock." John Chevedden, the proponent of this proposal or his representative, will now briefly present the proposal.

Jing Zhao

My name is Jing Zhao. I'm a shareholder. I'm reading my friend John Chevedden's proposal.

"4-Executives To Retain Significant Stock.

Resolved, shareholders urge that our executive pay committee adopt a policy requiring that senior executive should retain a significant percentage of stock acquired through equity pay program until one year following the termination of their employment and to report to shareholders regarding this policy before our next annual shareholder meeting.

Shareholders recommend that our executive pay committee adopt a percentage of 50% of net after-tax stock. The policy shall apply to future grants and awards of equity pay and should address the permissibility of transactions such as hedging transactions, which are not sales but reduce the risk of loss to executives.

As a minimum, this proposal asks for a retention policy going forward although the preference is for immediate implementation to the fullest extent possible.

A Conference Board Task Force report on executive pay stated that at least hold-to-retirement requirements give executives an ever-growing incentives to focus on long-term stock price performance. The merit of this proposal should also be considered in the context of the need for additional improvement in our company's 2011 reported corporate governance status:

The Corporate Library, an independent research firm, rated our company D, with "Very High Concern" in executive pay and "High" in Governance Risk Assessment.

Our other named executive officers were all given discretionary bonuses of $1.6 million. Discretionary

Bonuses undermine pay-for-performance. This suggested that our executive pay practices were not aligned with shareholder interests.

The directors of HP, a stumbling Silicon Valley giant, were accused of serious ineptitude spanning the appointment and dismissal of Carly Fiorina, the firing of Mark Hurd, and the selection of Leo Apotheker.

Source: The Doofus Factor, The Economist, September 17, 2011.

The Economist said the tech world has endlessly debated what went wrong with HP. Is it HP’s dysfunctional board, which the eloquent Thomas Perkins described as the worst board in the history of business? Apparently HP hired Apotheker without his ever meeting the full board. The tendency to hire CEOs who have done well elsewhere is most common among firms with busy and inattentive boards.

Margaret Whitman made a fortune by taking eBay public. But Whitman flagged badly as eBay grew into a mature business as it became more like HP. She also failed when she tried to translate her corporate celebrity into a political career. She lost miserably despite spending $100 million of her own money. It is not clear that someone who comes from a consumer-internet background like Whitman is an ideal successor at a company that does a lot of business with other corporations. The Corporate Library reported that Director Lawrence Babbio received 38% in negative votes. And directors

Kennedy Thompson and Sari Baldauf each received 22% in negative votes. Yet these 3 directors

occupied almost half of the seats on our most important board committees.

Please encourage our board to respond positively to this proposal to help turnaround the above type

practices:

Executives To Retain Significant Stock–Yes on 4." Thank you very much.

Paul T. Porrini

Thank you, Mr. Zhao. As described in the proxy statement, HP opposes this proposal. The board believe that HP's existing stock ownership guidelines and other compensation policies effectively facilitate significant stock ownership by executives and that establishing post-termination holding requirements would not be in the best interest of HP stockholders. Ray?

Raymond J. Lane

Paul, thank you. Paul has described the 4 items you've been asked to vote on. We'll now proceed to the voting on the agenda items that Paul has described. It's 2:13 p.m. and the polls are now open for voting on each of these items of business. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed and no further action is needed by you. However, ballots are available if you wish to change your vote at this time or if you have not previously voted. If you received the voting instruction card from your bank, your broker or nominee, you are required to submit your voting instructions to your bank, broker or nominee and will not be permitted to vote at this meeting unless you have obtained a legal proxy from the record holder giving you the right to vote your shares at the meeting. If you are a record holder and wish to change your vote or did not send in a proxy and wish to cast your vote now, you will need to submit your proxy card or ballot before the polls closed. If you do not mark the number of shares represented by your ballot, your ballot will represent all shares that you are entitled to vote at this meeting. If anyone would like to vote by ballot, please raise your hand, and you'll be given a ballot right now.

So as we're passing out these ballots and we're starting to vote and you're making your decisions, Meg is going to spend a few minutes discussing HP's business and strategy.

Margaret C. Whitman

Thank you. So it's great to be here. And thank you for coming and for your interest in Hewlett-Packard. Since joining HP as CEO, I've been spending a lot of time with employees, with customers, partners and investors. And my goal with all of these different constituencies to what was right out of the gate set the right tone. I wanted to calm the waters, demonstrate that we had a steady hand on the tiller and remind people that HP was actually always the company that they could trust and that they had always known. Now I learned a lot by visiting with these various groups. I went to a number of HP offices, hosted roundtables and employee meetings in Palo Alto, Cupertino, London, Vienna, Chicago, Houston, Hamden and Alpharetta, Virginia. I spent time with our sales force. I communicated regularly with our senior leadership team and worked very closely with the executive team at HP. I also met with more than 100 customers. I went to Discover in Vienna, Austria, which is our biggest customer event, where over 7,000 customers from around the world gathered. And I also attended our HP Global Partner Conference. Many of you may know, we have close to 200,000 distributors and value-added resellers, who help distribute HP product around the world.

So what have I learned from talking to all these people who care very deeply about HP? Well, certainly, I have found some skepticism, but I've also found incredible support, people who believe in HP, who want us to win and want to build for the future with HP. I found employees who believe in HP and who are incredibly passionate about winning again in the marketplace. And I have to tell you I found it to be very inspiring. The more time I spent listening, the more committed and passionate I became about HP. And the reason is that HP matters. Without HP, the United States Navy can't deploy ships. British pensioners don't get their checks on time. Health care doesn't get delivered. The International Space Station isn't connected. If HP doesn't work, the world doesn't work. And so what we do as employees and what you do as shareholders every day actually makes an enormous difference to the way the world works.

But at the same time, I also got greater clarity on our challenges as a company. And first, we have some real financial challenges. And these are challenges that did not just surface last year or surface on August 18 of this past year. Let me explain this chart to you. On the left-hand axis is revenue in billions of dollars, non-GAAP EPS in dollars. The blue line show the absolute level of whether it's revenues or non-GAAP EPS. The red line shows growth rates over time. And what you can see here is that the financial performance really started to deteriorate back in the second quarter of 2010. Whether you look at revenues or non-GAAP EPS, there's a trend here that has continued of declining growth rates for a number of quarters.

So it took us a while to get where we are, and it's going to take us a little while to get out. So to get a little bit deeper understanding of where we are, let's take a look at our Q1 performance. We delivered $30 billion in revenue. You can see right down there, second column, Q1 net revenue of $30 billion. We reported earnings per share of $0.92. Now the good news is we beat our guidance by $0.06 a share. And this is important because what I want to do with our investors is setting a tone of mean what we say and say what we mean. When we're going to -- when we give guidance, we're going to make that guidance. That's part of the way we're going to restore credibility with investors. And the good news is we beat our guidance by about $0.06 a share. But revenue and margin declined, and overall, our performance continued to weaken. This is due to a whole variety of factors, some of which are outside our control, whether it was the hard disk drive shortage in Thailand that caused tremendous supply constraints, about 32% of the disk drive capacity worldwide was wiped out by the tragic flooding in Thailand. The macro economy is not strong in all parts of the world in which we do business, and the yen had a significant negative impact on our printer business. You will recall that our biggest -- our partner in printers, in LaserJet is Canon. Their sales to us is denominated in yen, so when the yen moves against the dollar, we feel that very significantly in our operating profit in the LaserJet business.

But frankly, we also had some internal challenges that we've had to deal with. And every business unit had some issues. In the Personal Systems Group, revenue was down 15% year-over-year. Now in all fairness, this was largely due to the hard disk drive shortage and our continuing problems in China, but it was a weak performance, a weaker performance in PSG than I think many folks had expected. In the Imaging and Printing Group, which many of you know has been the lifeblood of HP, that business is being pressured on many fronts. Year-over-year, revenue decreased 7% with declines in both the consumer segment as well as commercial hardware, as well as supplies due to excess inventory that was in the channel due to relatively low sellout of ink and toner supplies. Adjacent businesses like the digital -- like the Commercial Digital Press business and Managed Print Services are doing very well, but not developing fast enough to replace the revenues that we're losing in the core [ph] part of the business.

In Enterprise Servers, Storage and Networking, we also saw Q1 revenue and margin declines. ISS, our Industry Standard Server business was hurt by the hard disk drive shortage. And we expect some continuing pressure on ISS through the second quarter because of that continued disk drive shortage. By the way, we think we are largely through that on the PC side of the business, but not as much on the Industry Standard Servers side. BCS, our Business Critical Systems servers is still working through the Oracle Itanium challenges. 3PAR Storage did very well, growing over 100% a year. So we're excited about that business, and networking is still very well-positioned.

In Services, revenues were up 1%, but margins declined, and we still have challenges in this business related to resource utilization, understanding where our people are, are they fully deployed, having the right people in the right job on the right account at the right time and, frankly, our business mix. There are businesses that we don't make as much money in. There are businesses that we make good money in, and we need to migrate away from some of those lower-margin businesses to some of the businesses that are going to be attractive to HP in the long haul.

My view is turning Services around is going to be a longer-term journey. It's a wonderful business. In many respects, it needs to be. In my view, we need to have a Services business at HP, but it is going to take us a while to turn around that business.

In software, with the addition of Autonomy, revenue grew 30% year-over-year with a 17.1% operating margin. But there was some weakness in the portfolio. For example, license revenue didn't grow like we wanted it to.

So as I pull the lens all the way back and look at the challenges that we face at HP, I'd say, overall, we've got to make it easier to buy from HP. We've got to make it easier to sell to our customers, and we need to make it easier to get things done with HP, within HP. All of our employees will tell you because we are so big, it is harder to get a decision, it's harder to get things done than it needs to be in order to quickly respond to market changes and our customer needs. Now I will say given the challenges that we face and the challenges in Q1, I also have to say we had some real successes. Like never losing sight of the customer and, frankly, delivering great product to meet their needs. The history of this company is all about great product. And I believe, if you don't have the right product for the right customer at the right time, you'll never be successful. And there are still a core of fantastic product engineers, who make great products for our customers.

Now in our server business, we continue to drive great innovation. Our Gen8 servers are the world's most self-sufficient servers. We also have a great project called Project Moonshot that ought to really revolutionize the server industry. And I believe we will be able to restore our momentum in industry standard servers as we continue to invest in innovation and let our product engineers do their very best work.

We're also rolling out an exciting new product line for our PC business. I think we have among the most exciting product lines of any competitor as we head into the second half of 2012. The Spectre won Best in Show at CES this year. The Folio is off to a great start, and the Z1 Workstation had a terrific reception at our partner conference, our Global Partner Conference in Las Vegas just about 3 weeks ago. And we have a video on the Z1 Workstation that I thought you would all enjoy.

[Presentation]

So in my view -- go ahead and clap. In my view, that's the innovation that HP is known for. That's who this company is, and we need to do more of it. We need to do a lot more of it. And my view is we need to invest in our businesses to drive that meaningful innovation on what has become very fast product cycles. But that's pretty tough right now. And given the trajectory of our financial performance, our cost structure is not sustainable. What this chart shows is revenue year-over-year growth rate in gray and operating earning expense year-over-year growth rate in blue. And what you can see for almost all of the last few quarters, our operating expenses are growing faster than revenues. In Q1, revenues declined by 7% and our operating expenses grew by 6%. This is not a sustainable formula. Think about your own household budget. If your income is declining by 7% and your household expenses are growing by 6%, you're not going to be able to sustain. And that is the situation in which we find ourselves. So we need to create the capacity to invest through cost savings.

And yes, many people ask me, well, hasn't all the cost savings been gotten at HP? And, yes, some of the obvious costs were dealt with in recent years. But we need to tackle the tough stuff, the real business process reengineering, fundamentally changing policy, changing how we do work to do things more efficiently and effectively. We can do a lot more to streamline operations, to improve processes and remove complexity from our business. So my overall approach is let's get our cost structure working well, so that we can deliver better performance by investing in innovation, in IT infrastructure, in any number of areas that will fundamentally drive revenue because in the end, we cannot cut our way to greatness. We've got to get that revenue line growing again. So my belief is by improving efficiency and effectiveness, we can do this.

Now the strategic realignment that we announced this morning is a perfect example of our thinking. By combining forces of PSG and IPG, that's our PC group and our printing group, to form the printing and personal systems group, we're going to get a lot of go-to-market synergies. We're going to be a much more powerful force as we sell into retail, as we help our partners become more successful, as we sell into the Enterprise. Our global account sales team joining Enterprise Server Storage and Network and Technology Services to form the enterprise business group, again, will simplify our go-to-market and make sure that we can make decisions on a rapid-fire basis in market to better serve customers.

Unifying marketing and communications to deliver a powerful single voice to the market, we spend almost $4 billion on marketing at Hewlett-Packard. I believe we can spend less and deliver greater and more effective marketing as a company.

So what we want to do is we want to make it easier for customers and partners to do business with us. We want to make it easier for employees to get things done, and we want to reduce cost and generate savings to invest in the business. So I hope you've got my message. We want to save to invest. We're going to have to save in order to get growth going again at HP. But just so you're not worried, we'll invest through a disciplined capital allocation process. Investment decisions are going to have to be supported by business plans and risk-adjusted financial projections. And this is an area that we're very focused on building a new level of rigor. We've got to look very carefully at the investment dollars we make whether it is cash investment, capital investment or operating expenditures.

In the near term, our priority is going to be about rebuilding the balance sheet of HP, and we're going to optimize our use of capital going forward to generate the very best returns for our shareholders. So our objective is to improve the bottom line and return cash to shareholders, while setting aside enough investment to get the revenues going in this -- in most important area called innovation.

So as I've said, we are going to have to make investments. It's incredibly important to all of us on the senior management team to position HP for the next 70 years. Most of you probably know that HP will be 70 years old in 2014, a track record that not many companies can be -- put up against ours. There are not a lot of companies in America who have grown and thrived for 70 years. And what we want to do is to set HP up for the next 70 years and restore its luster as the icon of Silicon Valley. HP is important to Silicon Valley. It's important to California. I would argue it's important to the United States of America and the world, and we want to set this company up for future success.

Now as I think about those investments, they fall into really 3 areas. First, we've got to fix our execution, ensuring that we have the right systems, the right processes and the right people in the right job at the right time with the proper incentives. We're going to focus more on our supply chain. Our supply chain is good, but I think it can be better. And I want to redefine our supply chain from buying components very effectively, which we do, to thinking about an end-to-end value chain. How do you design those products at the beginning to make sure that you’re leveraging the supply chain? How do you design quality in at the beginning or worst -- or at least find it at the factory as opposed to find it when it shows up at AT&T or Deutsche Bank or any of our biggest customers.

We've got to reduce complexity. One of the reasons that it is hard for employees to get things done hat HP is we have tremendous numbers of products or what we call SKUs, stock keeping units. We have got to get to a -- we've got to do a better job of customer segmentation and matching products to customers and skinning down the number of products. Because, think about it, every product you launch has its own set of components, its own supply chain, its own logistics, its own product managers, its own product marketers. We create tremendous complexity in the system by not thinking through what is the very best product that we could offer in the marketplace.

We also have to build quality into our products. As I said, when you miss quality at the beginning, you see quality problems at the end. It drives higher warranty costs, higher service costs that we can do a better job on. And then last is sales force productivity. We've added a lot of sales executives in this company over the last 2 years, and we have not gotten the return for that increase in sales executives. So we're going to reorganize and make sure that we deliver the revenue per sales person that we need to get our cost back in line with our revenues.

We're also been address the ongoing issues in each of our business -- in each of our businesses. And what that's going to require is a very crisp strategy with a focus on the right products and the right level of R&D and making sure that each business unit has the right cost structure for its future growth. We're going to see eroding -- if we're going to see eroding revenues and profits across the portfolio, I think we need -- if we're seeing that, we need to have a crisp strategy to turn that. And we're going to have to deal with the very competitive environment, and we're also going to have to take into account what's going on in the technology industry, which I think some of the changes that are happening in our industry are as big as changes that we've seen over the last 20 or 30 years.

So let's talk a little bit about the strategic direction for HP as a whole. So I'd like to start with where we are today. When people ask me, what is HP? Who is HP? What I tell them in this, I say HP is the world's largest provider of information technology infrastructure, software, services and solutions to individuals and corporations of all sizes. It's simple and it's clear and it doesn't need a lot of explanation. And that also applies to our strategy, which in my view, when you plot corporate strategy, you've got to start with what are your strengths? What can you build off of to build a great and enduring business?

Well, the core of our company is the infrastructure business: PCs, printers, servers, storage and networking. This is about 70% of the revenue of Hewlett-Packard. And you know what, we're proud of it. We're standing tall in saying, you know what, we are one of the best hardware infrastructure companies in the world. Let's not run from that. Let's stand up and be proud about that, and everything else builds on this massive and differentiating strength. We're in the software business next to expand that core. We're not in the software business to transform HP into a software company. We're in the software business to help solve really tough customer problems. Software differentiates and adds value to our customers and by the way, adds value to our infrastructure. It allows us to manage in a heterogeneous technology environment.

All those customers I talked to what they said is we love that HP can help us manage a heterogeneous environment of infrastructure and products from a whole host of different vendors. Software also makes the core sticky. And our new friends at Autonomy enable us to solve a whole host of new problems, which should be very synergistic with HP.

Next is the Services business. Our Services business also add value to the core, and it's essential to making everything work for our customers. Services creates long-lasting relationships. In fact, accounts with a Services relationship have 3x higher share of wallet than accounts that do not. So infrastructure, software, services wrapped into solutions that we have to stand for. In a few years, when we say HP to a CIO at a big company, I want them to say back to us, they are the very best in Converged Infrastructure. If you want someone to come and deliver your server, storage and network in a package that all works together, boy, that's what HP does. And we do it cost-effectively, and we do it better than anyone else. I want them to say application monitor -- modernization. Every company, every CIO has a host of applications that were developed many years ago that need to be migrated to the new world. We should be the best in the world at that. And then we want to lead in cloud. We want to lead in information security, and we want to -- information optimization, and we want to lead in security. So what we need to do is transform customer relationships from being a supplier to being a strategic partner.

So I hope you can see that every part of this portfolio actually fits. And we've got market leadership in virtually every category in which we compete. And the model, I think, is going to serve us very well in the future. So in my view, we need to build on this foundation of strength to address a rapidly changing landscape and capture some of the major opportunities in front of the company because our industry is in motion. I'd like to describe them as tectonic plate shifts. You know the plates in the Earth's surface when they move, they can create lots of change and lots of disruption. And the tectonic plates of our industry are shifting. I think it's on par with the move to the client server environment in the '90s and the move to the Internet -- in the 80s and the move to the Internet in the '90s. Think about it. Those big changes changed everything. They changed the way people live and the way businesses compete. So today, there is an entirely new paradigm for the delivery, the consumption and, frankly, the fundamental business model of technology.

It's about the cloud. Established profit pools are in play. When you think of some of the entrenched leaders in database or storage or transactional software, all of that is being disrupted. And we're going to have to move quickly to capture some of those emerging opportunities and be there when these tectonic plates actually affect the bigger and bigger part of our industry. The customer challenge, of course, today is a lot more complexity. Technology providers are building vertical stacks, trying to lock customers in. But customers need help managing that complexity, and that's where we come in. We are positioned to win in this space not based on a software franchise, not based on locking customers into a vertical stack. Our approach is based on open systems and open architecture, and we can manage and move information across a heterogenous environment like no one else and the hardware, software services and deliveries capability make it all work beautifully for our customers.

So we need to build on those strengths to capture the future as I said in 3 major areas. And as I said, we aim to be among the leaders in cloud, security and information. So as I said -- let me just spend a moment on the cloud. We already have a strong position. Converged Infrastructure, the backbone of cloud computing, runs many service providers already today. HP CloudSystem, which is our brand in Converged Infrastructure, leads in private cloud implementations and is a foundation for cloud service providers. In fact, we have nearly 600 implementations already. Very few people understand what a leader we already are in private clouds.

Our Enterprise Services group currently manages nearly 200 managed clouds. Autonomy has 40 petabytes of cloud data under management, and Software manages, orchestrates and analyzes infrastructure, applications and information across very complex and heterogeneous environments. And we've launched a private beta for our public cloud offering just a couple of weeks ago. A lot more news coming on that over the next couple of weeks. So we're working towards a consistent experience across private, managed cloud, public cloud and traditional IT. But to leverage all of these capabilities, we've got to get security right. The rapid adoption of the cloud, virtual environments and mobile applications all increases risk, doesn't it? But even beyond that, we live in a dangerous world. If you think back to the early '90s, there were a bunch of teenagers out there trying to hack into systems just for fun and fame and fortune. That turned into professional hackers who are doing it for money. That turned into office buildings of professional hackers around the world that came to work every day just like we come to work at HP to hack into systems all over the world for financial gain. And then of course today you see global terrorist threats that are trying to compromise some of the most important systems in the world.

So we've got -- this is a huge need for customers. We have to challenge traditional approaches to securing the enterprise. The current approach is all about putting locks on the door. Think of your own house. To keep intruders out, you lock the doors. But isn't also helpful to have an alarm system. Isn't it also helpful to have a monitoring system where you can see the perimeter and see people who are trying to get into your environment? Well, that's what we're doing. We provide the visibility and the meaning to an event. We can differentiate by allowing enterprises to see and to understand everything across hybrid environments and then help them take the necessary actions to secure their environment. We need to see what's happening, and we actually have leading capabilities to do that with ArcSight, TippingPoint and Fortify, and we need to understand the context of these events as well. And as it turns out, we have leading capabilities there. HP information management, Autonomy and Vertica help make sense of this vast trove of information, which leads me to my third priority, Information Management or optimization.

Current databases address only about 20% of that data set. Customers want the insight that's coming from that explosion of information outside of traditional databases, whether that's text or video or audio or e-mail or social media. We call that human information that exists in its natural form in the real world. Customers want and need to analyze that data and processes 100% of information in all its forms. So Autonomy and Vertica give us leading capabilities to bridge traditional databases and the world of human information.

HP IM also amplifies those core franchises, servers, storage, networking, printing and PCs. So in my view, we are very well positioned to be a leader in 3 of the most important trends in the IT industry: cloud, Information Management and security.

So I'd like to leave you with a couple of thoughts. One is we have been -- we are embarked on building HP in a very thoughtful way that is true to the spirit of innovation, of financial discipline and financial success that has defined this company for much of its history, and we have incredible strengths to build on, the industry's broadest portfolio of products, market-leading positions. We are #1 or #2 in virtually every market in which we compete and incredible HP people. I have to say one of the joys of coming to HP is to understand the dedication and the quality of HP people around the world. Right here in Palo Alto, I was a little worried. I thought given everything that has happened to HP, would there have been a brain drain out of HP. In fact, that is not the case. I would put HP people up against any technology company group that I've had the privilege to work with.

We have deep customer relationships. Customers want HP to win, and we have fantastic partner relationships. So people who want to work with us, people who want to win. That's about as good as it gets. And as I said at the beginning, we have a clear vision of where we want to go and what needs to be done. And I am increasingly optimistic about our chances of turning HP around and restoring HP's rightful place in the technology industry. We can build on our industry leadership to capture the future.

So thank you very much for coming today. And thanks for spending a bit of time talking about HP.

Raymond J. Lane

You're going to take question?

Margaret C. Whitman

Yes, I do. Okay. We're going to take some questions. And you guys are doing the right thing, lining up at the mic.

Question-and-Answer Session

Unknown Shareholder

Thank you, Mrs. Whitman, for taking on this responsibility. You didn't have to do it. I guess since I was a buyer of eBay at the IPO, I voted for you as much as anybody here. I just wanted to talk about the shareholder proposal. John Chevedden is a well-known shareholder activist. He switched his priorities to this "hold your stock until you're dead" paradigm. I remember somebody else gave that proposal at Oracle. And they mentioned that the public library or whatever they called it, the Corporate Library, gave Oracle a D because Don Lucas was too old and Larry Ellison was too rich. If David Packard and Bill Hewlett had complied with that proposal, Stanford wouldn't have gotten the $500 million at their 100th anniversary. We wouldn't have a wonderful aquarium in Monterey, and I hope all our shareholders voted down on that proposal.

Margaret C. Whitman

Thank you for your comment. Thank you.

Unknown Shareholder

[indiscernible], shareholder. First, thank you for taking some of the urgent problems of HP. I think that was very critical. My question is about HP and what it is now. You mentioned that it's the largest information technology infrastructure software of services solution company. But the reason I ask is about 5 years ago, in public, I asked Steve Jobs how he competed with the bigger PC makers even though they had a small market share. And he said, well, Apple products are just better and the technology is years ahead of the competition, especially in mobile. Now apparently he has been correct. They’ve had good margins, good revenue growth, and they've created $500 billion of market capital over about a decade, which is about 10x what this company is worth right now. And they did it in the market space where we used to be dominant. HP is more than PCs now, of course, as you listed, but I'm wondering if our product lines are just better? Our product divisions have not exciting margins, not exciting revenue growth, so I'm wondering after all, I can go down the street and buy similar products. I can buy servers, PCs, printers, services. And that's after we've spent $3.2 billion a year on R&D versus Apples' $2.4 billion. So my question is, do you think HP was and is innovative enough?

Margaret C. Whitman

Yes. Very good question. So listen, I think we all have to applaud Apple for their success. This is one of the great business renaissance stories of our generation. I have to say Steve Jobs is probably the business genius of our generation, so we need to give Apple its credit. What I will say is the heritage of this company has been having -- has been fantastic products with great engineering that meet very specific needs in the marketplace. And if you look about across our portfolio today, as I said, we are still #1 or #2 in every business. And that doesn't mean that we don't need incremental R&D in our server business or our storage business or our networking business. That doesn't mean we can make -- we can't make incrementally great products. But you heard me say that my focus is product, product, product. If we don't have the very best products uniquely suited to the market segments that we want to serve, then we won't win. And so what I'm trying to bring to this company is a renewed focus on R&D, a renewed focus on the greatest products, not too many products, but the greatest products in each of the markets in which we compete. So I don't think we're where we need to be, but we have a great base to build on. If you look at our industry standard server business, that's a tough competitive business, but we do very well there, and we aim to get out ahead. If you look at our printer business, this is one terrific business that we need to invest some more in, we need to change some of the economies of that business in my view, but we are the leader in that business. And one thing I will say on the returns, the PC business doesn't make large returns. It's about a 5% to 6% operating margin business. But the innovation in that business has been on the business model. And we have almost infinite return on invested capital, which is of course another way you have to look at returns. But then you look at Enterprise Server, Storage and Network. We have an excess of a 20% margin in that business. If you look at our printer business, again in excess of 20% operating margins. So we need to get better at product. We need to be a product company. We're going to move in that direction. We have a great base to build off of, but we won't be satisfied until we have the most innovative products on the fastest product cycle with leading industry returns. So thank you for that question.

Mark Leonard

My name is Mark Leonard, and I've been an HP shareholder for more than 30 years. One of the characteristics that distinguishes HP from other companies is that we do have our core values, and we know what they are, and we stick with them. One of the core values is uncompromising integrity. I have here a written promise from Hewlett-Packard to its retirees that when a retiree dies, their survivors will be paid $5,000 approximately the cost of a funeral. HP employees are encouraged to rely on that promise when they decide if they can afford to retire because retirement isn't a fixed time. I have here a letter from HP breaking that promise to about 3,000 retirees. With the background of uncompromising integrity, I'd like to see an agenda item for the Board of Directors resolving uncompromising integrity with broken promises.

Margaret C. Whitman

I didn't know about the specific instance in which you are talking about, so we will -- you have my word, we will look into that. And I think we actually have a few people here today who are able to answer very specific questions about health benefits and retiree benefits. So Tracy Keogh, our Head of HR, maybe you could direct him to the person at the end who we should we talk to. But I promise, we will get back to you on the issue of the $5,000 versus the $3,000.

Mark Leonard

When I raised this question before with your predecessor, the response was an attorney got back to me saying federal law overrides the state law that would protect the retirees. I'm not talking about federal laws, state law, but uncompromising integrity, and I think that's different.

Margaret C. Whitman

I understand. Thank you for bringing it to my attention.

Jing Zhao

My name is Jing Zhao. I'm a shareholder. I'd rather ask another question. I, myself, is a political refugee from China, so my concern is human rights. I say, so when you make your presentation, you mentioned your information, cloud, security or supply chain and services. All this leads to human rights. I'm certain we know that China is a very big concern. I talked with some person, HP person, but it seems they suspended the dialogue. I know you know my other friend John Harrington. He has this book, The Challenge to Power. And I know he has communicated with way HP before. Before I talk to [indiscernible] maybe I could read one word. He says not unlike the lessons we learned from the civilian principles of voluntary code allow both global corporations and the governments to get off the hook. I looked at the website of HP about human rights principle. I think it's very good. The many contents are very good. But the website also mentioned some like a Danish [ph] think-tank or some Chinese government agency pride of HP. But basically, this looks like a PR. It's not verifiable. For example, as a shareholder, I want to make maybe some suggestions to the board if [indiscernible] independent like a research or a human rights organization to help our company to conduct an independent survey to how the human rights are practiced to implement this kind of policies. So this is basically my question.

Margaret C. Whitman

I understand. So let me make a couple of comments. First of all, we're always open for suggestions on how we can be a better global citizen. But my view, and I get asked this question quite a bit is, we must do business in China. China is an exploding market. We have got to be a leader in China in all of our businesses because in the end, that helps us hire employees in the United States and around the world. We cannot walk away from China. We are in a global market. We have to compete.

Jing Zhao

No walk away. Yes, completely [indiscernible].

Margaret C. Whitman

And my view is by being in China, we very much anchor in the core values of HP, which is respect for the individual, working conditions, fair wages. And my view is by being in China, by being a leader in China, we can actually be a good role model and be a good employer and a good citizen in China. So that's what we aim to do. And it can be challenging from time to time, but I have to say, I'm quite proud of how we have conducted ourselves in China, how we do business in China, how we work very closely with different groups there. So I feel good about where we are in China. Again, always open for suggestions. I think we can always do better, but I have to say, I'm proud of our work in China.

Jing Zhao

Okay, thank you. Even though you didn't answer my question. Thank you.

Bob Stewart

I'm Bob Stewart from Los Altos. I have 2 comments or suggestions. I bought my HP stock in 1956, and I still have it. The first comment is, I'd like to see you guys come up with a laptop, which is not susceptible to damage by any virus. And it seems to me this is conceptually possible if you put your operating system and your user code into RAM and prevent any split compile software to take over the machine and do damage.

Margaret C. Whitman

Thank you. I appreciate that.

Bob Stewart

The things that happened with the situation with the Internet are close to a disaster, and I should think it would be a good market position to have a system, which is not susceptible to that type of damage.

Margaret C. Whitman

So I think what you're talking about falls under our security initiative, which is how do we safeguard our customers' infrastructure, which includes server, storage, networking as well as PCs. And I know our engineers are thinking hard about this. And I know -- by the way, this is a pervasive problem. My husband's PC was infected by a virus over the weekend and froze its hard drive. And it took -- he's at Stanford University. It took the IT department 3/4 of a day to get him back up and running. So it's a real customer need. It's a real need for the enterprise, and I know we have people working on that, but I appreciate your comment. Thank you very much.

Bob Stewart

The second comment I have to make is there's a little company in Cupertino not far from your facility down there, which has stores that simply sell their own product line. And people line up the night beforehand to buy product when it's announced. I would like to see HP have an HP store. I go to Fry's to buy a pocket calculator, a 35s, and I don't find it. I see a Casio. I see all kinds of stuff, but I don't see an HP chain that I want.

Margaret C. Whitman

So interestingly -- I'm sorry, go ahead. Are you done?

Bob Stewart

In addition to the store selling product, it could have a repair capability, so that when the printhead in my printer fails, I don't have to wait 2 or 3 weeks for a new printhead to arrive from your facility on the East Coast. There are obvious ways you can improve the way HP appears to the customer, and I think it would be beneficial in terms of sales.

Margaret C. Whitman

I appreciate that. Interestingly enough in Brazil, I believe it is, we have HP stores. And that is an emerging market. We decided to go in with HP stores there that we actually work with a partner to bring those stores to market, and they've been remarkably successful. Now whether that works from an economic point of view in the United States, we would have to see. What I will tell you is one of the things we are working hard to improve is hp.com. And particularly, we have 2 parts of hp.com. Our business-to-consumers site and our business-to-business site. And you might imagine, I actually know a little bit about B2C commerce sites. And I think there's a much better job we can do about presenting compelling offers, bundles of printers and PCs. I think we can really make hp.com a much better resource for service, for repairs, for all those kind of things for our customers.

Bob Stewart

It can't fix my printer or printhead.

Margaret C. Whitman

You can't fix your printer, but we might be able to get you the parts faster. I appreciate it. Thank you very much.

Unknown Shareholder

Meg, I have a great respect of you, so [indiscernible]. My name is Curtis Louie [ph]. I hold HP stock since 1970. I'm still holding HP stock. I have a business question. Currently, Oracle holding $30-somewhat billion looking at a $40 billion, HP company want to buy them out because they [indiscernible] ready to run HP again. That's a Wall Street Journal rumor. Now back to the '70. When Apple computer at $25 a share, HP was $25 a share. Today, Apple computer exceeding $100 billion on dividend, hitting $600 and over. HP sitting at $23. Now the question is PC -- well, over the period, the first in both recent HP 35 inject printer. When we allocate for the directors, the right we saw [ph] in HP lab [indiscernible] region because PC and printer are mature business. You can't rely on the mature business on a big company to excel. We have to have a new in [indiscernible] invest in the new arena. [indiscernible] what will you do? Buy unlisted company. He have a vision. My question is, what is your vision? What are the directors' visions? [indiscernible] put the values on the news media and made [indiscernible] angry? Thank you.

Margaret C. Whitman

You're welcome. So let me repeat the question as I understood just to make sure I got it. I mean, you're point is, Apple had a vision, their market cap is much larger than ours. What is our vision to, sort of, turbocharge HP?

Unknown Shareholder

My question is, so what is cooking in HP labs?

Margaret C. Whitman

Right, what is cooking at HP labs? Right. So let me answer it this way. Listen, this company was founded on the power of innovation. It was founded on disruptive technology. In my view, there are 2 kinds of innovation. There is evolutionary innovation, which what every business needs to do to keep ahead, to stay ahead, to grow their market share. And then there is disruptive, what I would call revolutionary innovation that fundamentally creates entirely new markets, that sets new standards in the business. We've got work to do in evolutionary innovation. In my view, over the last few years, we have underfunded R&D in many of our core businesses just to keep ahead of our leadership position. And let me say my view in PCs and in printers and in industry standard server, software and networking, we've got a lot more running room in these businesses. You might argue that they are big, mature businesses, it's true. But we ought to be able to outgrow the markets in which we play. And we ought to be the most profitable player in those businesses that generates a lot of cash. So my view is we ought to be a faster than GDP grower company that grows earnings faster than that. At the same time, we've got to place some bets on disruptive or revolutionary innovation. And whether that is coming out of HP labs or in the R&D that's in our business units, we've got to place a few bets to say where can we fundamentally change the name of the game. Where can we fundamentally reset the industry standards or reset what the opportunities are. And my view is we have a few places to do that. But believe it or not, I think there are some big changes coming in printing. I think there's some big changes coming in servers, big changes coming in some of our other businesses. But again, I am a big believer in focus. Could we please do, in R&D, a small number of things really well as opposed to try to give everyone just a little bit. And so one of the jobs that we have as management and that I hold my business unit leaders accountable for is where are we going to place those R&D bets? What is the mix between evolutionary innovation and revolutionary innovation? And let's make sure that we've got those bets appropriately placed. And by the way, many times on revolutionary innovation, big companies like ours make acquisitions. And in my view, we have relied too heavily on acquisition and not enough on organic innovation. So we're going to try to switch that blend back again. But we live in Silicon Valley. There's lots of new things starting out, and so I would say, it's a blend of our internal evolutionary innovation, our internal revolutionary innovation and some selective acquisitions at a much lower level than we we've done over time. But great question. Thank you for that.

Unknown Shareholder

My name is Stephanie Muñoz [ph]. I live in Los Altos Hills, and I knew David Packard, not well. But he was not an ordinary man, and Hewlett-Packard is not an ordinary company. The most extraordinary thing, the one for which David Packard is best remembered is that in the first downturn in the electronics industry, when other companies were laying off workforce, Hewlett-Packard did not lay off. They simply cut the entire payroll by, I think, it was 40%, it was an awful lot, so that no one would go without a job. And in recognition of that, this company's position in our community because dividends and stock splits are small consolation to a merchant without customers, a doctor without patients, a landlord without tenants. Depriving the masses of purchasing power will ultimately drive our whole society to the poor house. However, we do have unemployment. My question is -- my first question is, can you cut operating expenses without layoffs by recouping the egregious arbitrage taken by the health insurance companies? It's a lot of money. And second, will you institute a serious investigation of the single-payer system that our international competition has, as an anchor to its economy, supporting -- mutually giving support to their economies at our -- to a certain extent, to our expense? And third, will you get together with your fellow American manufacturers to use your political leverage to make the United States government give back the health funds pool to the employers and workers who are paying for it?

Margaret C. Whitman

Wow. So I think you may have gone beyond my technical knowledge of how our health system works or how we do this at HP. Let me make a couple of broad comments, and then I would like to hook you up with the Tracy Keogh who is our Vice President of HR, who really has responsibility for a deep understanding of how we provide health care to our employees. But first is this is a ever-increasing cost, a rocketing cost for every American company. And look, if you look at the country as a whole, this will be an unsustainable part of our GDP unless we change things. So we understand that, and we are working hard to implement a wellness program at HP. And I am inspired by Safeway's program that was launched by Steve Burd who created -- you pay as an employee a certain amount for your healthcare. And what Steve instituted was if you're body mass index was within a normal range, your blood pressure was within a normal range and you were not in a prediabetes condition, then actually you have -- you are able to pay less for you healthcare. And at first, there was a tremendous hue and cry about this. But 3 years later or 4 years later now, Safeway's health care cost are declining, not increasing. And you go into the Safeway lobby and it shows the thousands of pounds that have been lost by Safeway employees. And I would tell you it's a huge hit. So actually Cathie and I were talking about this just the other day. How can we implement this more effectively at HP because it's the right thing for employees and, of course, the right thing for our health care cost? So beyond that in terms of the health care pools and other things, I'd like you to connect with Tracy because the truth is I can't actually answer those questions since I don't know quite enough about that. So thank you.

Unknown Shareholder

My name is Herbert [indiscernible]. Correct me if I'm wrong, I heard you say HP will celebrate its 70th anniversary in 2014. As far as I remember, HP was started in 1939. I forgot, unfortunately, my 35, so I have to calculate for you in my brain. And I think 1940, we have 75th anniversary.

Margaret C. Whitman

Is it right, 75th? Well, there you go. So somehow I had 70th in my brain. All right, I stand corrected. Thank you for that. Okay, so the hilarious thing about this is now 3 or 5 months, I've been saying we're going to set up HP for the next 70 years because we'll be 70 years old. You were the first person to correct me, so thank you for that.

All right, I think that concludes our question-and-answer session. Thank you very much for your participation, and thank you for your interest in HP.

Raymond J. Lane

Thank you, Meg, and thank all of you. We expect the polls to close shortly. Therefore, I'd like to ask each of you to complete your proxy cards, ballots, raise your hand if you have a ballot or proxy to be submitted. I see several hands up. So you have to submit them now in order for them to be counted. The inspector of election will not accept proxies or ballots submitted after the closing of the polls. Also, please note that any proxies or ballots submitted here today will be subject to the final verification of the inspector of election.

We have everybody's ballot? Okay. There being no further ballots, I hereby declare that it is 3:13 p.m. and the polls are now closed for voting on the items of business that were discussed by Paul. All ballots and proxies are now in the custody of the inspector of election. While the votes are being tabulated, I'd like to take a few moments just to share with you some of the priorities that this Board of Directors is looking at for 2012.

In response to some of the shareholder feedback that we've heard over the last year, we've made a lot of changes in the last 14 months to help improve our governance and leadership. We have largely reconstituted the board including adding Ralph Whitworth to the board just recently in response to shareholder input. We have -- 60% of this board has been on this board for less than 15 months. I believe my numbers are correct. Is that right, Paul, 15? And 75% of the board has served less than 3 years. So when I heard the shareholder proposal mention Tom Perkins, I have -- Tom Perkins is my partner and -- at Kleiner, Perkins, and I just don't know what board he's talking about anymore. I think, he -- I just assume he's talking about the board he served on because the majority of this board is new, and he doesn't know who -- these board members. We've adopted a new governance structure with an Executive Chairman a lead --and a Lead Independent Director. We've changed many of our committee assignments over the last year, and we have continued to maintain strong governance practices.

Aside from attending to overall management and risk assessment as usual, current board focus areas include the following, and I think we have a slide to kind of show some of these. First of all, we've talked about these a lot, and we've said these are -- we're very comfortable. These should be our priorities for the year. Increasing investor outreach and access. In the last -- before we started focusing on this, I don't think we've done a great job of reaching out. And what we're doing now is we're frequently reaching out to large shareholders even when we don't have something to tell them. We just want to listen. What do you think about some of the recent changes we've made in the board or in governance.

Secondly, overseeing strategy development. You just heard Meg layout very eloquently the direction we're taking, and you'll hear more in the future. It is the board's responsibility to help her with that and to oversee the strategy development. Continuing to closely monitor HP's financial performance, our Audit Committee, our finance committee, the addition of Ralph to the board in helping us understand capital allocation better and educating the board on that process. Continuing to ensure that executive pay is linked to performance after we lost an advisory board a year -- vote a year ago at this annual meeting. We took this very seriously. We made a number of changes that you've now had a chance to review in linking our executive pay to performance. And I think we have a very, very different structure than we had a year ago. Facilitating closer interaction between board members and senior leaders of the company. Meg instituted a process she calls board buddies. So we each have a buddy in executive management that we spend time with that we get deeper into their business. So board members now are deepening their understanding in each of 1 or 2 businesses that allows us to be much more eloquent about what's going on in those businesses rather than trying to keep up with the whole thing at each board meeting.

Increasing the focus on succession planning and talent development. We want the next CEO of HP to come from inside HP, and we want executive positions to be looked at as those are positions that I can aspire to if I work hard enough and I produce enough impact inside HP. And we want to get back to that, so we really have taken seriously this and have put in place a pretty comprehensive management succession program. Enhancing board and CEO performance assessment practices. We've asked Raj Gupta, our Lead Independent Director, to lead a process where we frequently look at and get anonymous feedback from the board and from management on how we're doing and how we're actually governing, how educated are we about the business, how engaged are we about the business. I will tell you, I've never been a part of a Board of Directors as more engaged than this of Board of Directors is in this business.

We will continue to provide you updates on these board priorities. So expect that when you come back here next year, and you sit down and you hear this presentation that there will be some comments about how we think we did on these priorities. And we hope you will be vocal about how you think we did on those priorities as well. We take these very seriously.

Okay. So now let's turn back to the results of the vote. Based on the preliminary tally provided by the inspector of election. Bill? He's sitting over here. So let's start with the votes cast for the election of directors, Bill?

William Marsh

Mr. Chairman, the inspector's report will show that majority of the votes cast were cast in favor of each of the people nominated for Director.

Raymond J. Lane

Now you've noticed, he's been over there quietly counting millions and millions and millions of votes. It's amazing, doing it without a calculator.

William Marsh

No, it's my HP laptop.

Raymond J. Lane

Okay. Based on the vote, I declare that all 11 Director nominees have been elected to serve for the next year to hold office until their successors are duly elected and qualified. Thank you. Now I'd like to ask Bill to announce the results of the vote of the ratification of Ernst & Young as HP's independent registered public accounting firm.

William Marsh

Mr. Chairman, my report will show that approximately 98.5% of the votes were cast in favor and approximately 1.3% of the votes were cast against the proposal.

Raymond J. Lane

Apparently, 3% of you have really got a beef with Ernst & Young for some reason. Okay, so based on the vote, I declare that the appointment of Ernst & Young as HP's independent registered public accounting firm has been ratified.

Now, Bill, I'd like to ask you to announce the results of the advisory vote on executive compensation.

William Marsh

Yes, Mr. Chairman. The inspector's report will show that approximately 77.2% of votes were cast in favor, and approximately 20.7% of the votes were cast against this proposal.

Raymond J. Lane

Thank you, Bill. So now I'll ask Bill also to announce the results of the fourth item on the agenda, and that's the stockholder proposal.

William Marsh

Yes, Mr. Chairman. Further, my report will show that approximately 24.4% of the votes cast were in favor of the shareholder proposal and approximately 75.1% of the votes were cast against this proposal.

Raymond J. Lane

So based on this vote, I declare that the stockholder proposal has not been approved.

I now declare that the business of today's meeting is concluded. Thank you very much for coming. We have really enjoyed this meeting. There's great feedback. The questions were really, really good. And, Meg, thank you for your inspiring presentation. We're sincerely grateful to all of your interest and your continued support of Hewlett-Packard. Thank you.

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