News release

HP Announces LYONs Repurchase Program

PALO ALTO, Calif., Dec. 19, 2000

Hewlett-Packard Company (NYSE: HWP) today announced that it has adopted a repurchase program for its Liquid Yield Option Notes (LYONs) due 2017. Under the repurchase program, HP may purchase the LYONs from time to time at varying prices.

HP issued and sold $2 billion aggregate principal amount at maturity of the LYONs pursuant to an Indenture, dated as of Oct. 14, 1997, as amended March 16, 2000, between HP and The Chase Manhattan Bank and Trust Company National Association, as Trustee. The LYONs do not pay any current interest and the principal amount accretes at the rate of 3.125% per annum.

The terms of the Indenture permit redemption of all or any part of the LYONs at the option of HP on or after Oct. 14, 2000 at the redemption prices set forth in the LYONs. In addition, according to the terms of the LYONs, the security holders have the right to convert the LYONs at any time on or prior to the close of business on the date of redemption by HP. Upon conversion, HP may elect to deliver common stock or cash in lieu of common stock in accordance with the Indenture. The number of shares of common stock currently issuable upon the conversion per $1,000 principal amount of LYONs is 15.09.

About HP

Hewlett-Packard Company -- a leading global provider of computing and imaging solutions and services -- is focused on making technology and its benefits accessible to individuals and businesses through simple appliances, useful e-services and an Internet infrastructure that's always on.

HP has 88,500 employees worldwide and had total revenue from continuing operations of $48.8 billion in its 2000 fiscal year. Information about HP and its products can be found on the World Wide Web at http://www.hp.com.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of HP and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the ability of HP to retain and motivate key employees; the timely development, production and acceptance of products and services and their feature sets; the challenge of managing asset levels, including inventory; the flow of products into third-party distribution channels; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to the annual report on Form 10-K for the year ended Oct. 31, 1999, and subsequently filed reports. HP does not intend to update these forward-looking statements.