News release

HP Launches Cash Back Lease Promotion

Innovative Promotion Helps Growing Businesses Purchase IT Hardware, Software and Services at Low Monthly Costs

PALO ALTO, Calif., July 31, 2002

HP (NYSE: HPQ) today announced a new promotion that offers customers two percent rebates for leased purchases between $499 and $50,000. The lease-rebate program will run from Aug. 1 to Oct. 31, 2002, with rebates paid within 60 days of the product purchase.⁽¹⁾

"HP is committed to ensuring customers have access to quality and affordable technology solutions," said Irv Rothman, president and chief executive officer, HP Financial Services. "Leasing is a smart way for customers to purchase the technology they need to be competitive while preserving capital to invest in other key areas of their businesses."

The promotion is available to customers purchasing directly from HP or indirectly through solution providers or affiliate Web sites.

"This is a remarkable program that will enhance our ability to deliver HP solutions and quality services to customers," said Natalie Knudson, president, Modern Business Technology, Inc., an HP solution provider based in Madison, Wis. "Leasing is an attractive purchasing alternative because it requires less capital outlay which is important to growing businesses."

Knudson will be among the first resellers to leverage HP's new leasing promotion. Per a joint announcement with HP, her company is showcasing Virtual Receptionist -- a remote greeting solution -- to more than 1,000 small business owners attending the National Black Chamber of Commerce annual conference in Milwaukee, Aug. 1-3.

HP Business Continuity Services

Leasing also provides access to affordable disaster-recovery services. According to a report by the University of Texas Center for Research on Information Systems, "Nearly half the companies that lose their data through disaster never re-open, and 90 percent are out of business within two years."

"Fewer than half the 7.1 million U.S. small- and mid-sized businesses with PCs have formal backup procedures," said Raymond Boggs, vice president, small business and home office research, at market research firm IDC. "Regular backup is like regular dentist visits. People know they should take preventive steps, but many wait until there's a problem."

HP Financial Services offer customers Advantage Protection Plus, a repair and replacement program that helps customers keep their businesses up and running in the event that leased information technology is damaged, destroyed, stolen or lost. Advantage Protection Plus is one of the most comprehensive programs in the IT equipment leasing industry that helps companies safeguard their IT investments and ensures quick access to critical data in the event of a negative incident.

Customers obtain Advantage Protection Plus by simply indicating they choose Advantage Protection Plus during the lease process and paying a low monthly fee of 0.2 percent of the total equipment cost. Advantage Protection Plus covers all hardware including non- HP equipment for immediate repair or replacement.

"Small- and medium-sized enterprises have the same needs as multinational corporations when it comes to business continuity measures and disaster planning," said Rothman. "Advantage Protection Plus provides them with a cost-effective solution for protecting their assets and for providing them with access to the data they need to run their businesses."

More information about HP Financial Services is available at http://www.compaq.com/financialservices/homepage.html. More information about HP's business continuity services is available at http://www.hp.com/hps/.

About HP

HP is a leading global provider of products, technologies, solutions and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. HP completed its merger transaction involving Compaq Computer Corp. on May 3, 2002. The company would have had combined revenue on a pro forma basis with the Compaq transaction of approximately $81.1 billion in fiscal 2001 and has operations in more than 160 countries. More information about HP is available at http://www.hp.com.

⁽¹⁾ Lease products available through Hewlett-Packard Financial Services Company ( HP FSC) to qualified commercial customers in the U.S. and are subject to credit approval and execution of standard HP FSC documentation. HP FSC reserves the right to change or cancel this program at any time without notice. 2 percent cash rebate lease offer -- HP FSC will send customer a check for 2 percent of the total lease transaction amount within 60 days after HP FSC has received the first lease payment from customer. Two percent lease offer applies to all lease transactions up to $50,000. Some product restrictions may apply. Other fees and restrictions may apply. This offer is valid through Oct. 31, 2002.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's annual report on Form 10-K, as amended on January 30, 2002, for the fiscal year ended October 31, 2001, HP's quarterly report on Form 10-Q for the quarter ended January 31, 2002 (as filed with the SEC on March 12, 2002) and subsequently filed reports. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, HP's results could differ materially from HP's expectations in these statements. HP assumes no obligation and does not intend to update these forward-looking statements.