News release

HP Demonstrates Strong Post-merger Growth in PC Unit Shipments

HP, Dell in Virtual "Dead Heat"

HP (NYSE:HPQ) posted "healthy sequential growth" in global PC markets during the third calendar quarter of 2002, outpacing the overall PC industry's growth and reflecting post-merger progress, according to analyst reports.

Preliminary results released Thursday by International Data Corp. and Gartner Dataquest indicate a virtual "dead heat" between HP and Dell in worldwide market share, with as little as 0.1 percent of market share separating the two companies. In the United States alone, HP is growing nearly as fast as Dell, which reflects a significant uptick in HP's momentum. According to IDC data, HP grew at 15 percent quarter-to-quarter in the United States, compared to Dell's 16.9 percent. The data presented by both analyst firms also reflects HP's return to sequential growth in worldwide PC sales.

"This is like the first round of a 12-round heavyweight fight," said Jim McDonnell, vice president of marketing, HP Personal Systems Group. "Since the new HP emerged a few months back, we have continued to make great strides across the board in our PC business. Today, the numbers show that we are growing faster than the market, a strong indication that the merger is working. These results are a testament to the loyalty and confidence of HP's customers around the world and to the commitment of our employees and partners to delivering continuous innovation."

According to IDC estimates, HP grew faster than the worldwide market, increasing global shipments 6.3 percent from calendar Q2. In its report, IDC stated that HP "has improved its growth dramatically from the second quarter and appears to be overcoming merger-related challenges fairly quickly." In a "quarter of behemoths," HP and Dell are leading the market's overall growth.

Gartner called the worldwide race for market share a tie between HP and Dell, also highlighting HP's overwhelming leadership in key markets such as Europe with a market share of 18.5 percent. In its Oct. 17 report, Gartner noted HP's sequential improvement as "encouraging" at the current stage in the merger process.

"HP's PC business is back on the growth path less than six months after the merger. We are increasing cost efficiencies, implementing business model improvements and continuously innovating products," said Mike Larson, senior vice president and general manager, HP Personal Systems Group Americas. "We've been taking aggressive action, and we expect future data will better reflect the impact of recent PC price cuts, new product introductions and major customer wins."

Just last week, HP introduced a commercial notebook PC for $899, plus a line of commercial desktops with prices reaching below $500 for the first time. Likewise, the company introduced an aggressively priced line of consumer offerings for the holidays -- including a $399 desktop PC -- and a breakthrough new product category with the HP Media Center PC, which revolutionizes the home entertainment experience on a PC.

Under a single contract announced this week, Colombia's largest public utility service company -- Empresas Públicas de Medellín -- will purchase 200,000 desktop PCs worth more than $100 million. Last week, HP announced it will provide approximately 40,000 PCs for use in 1,456 Home Depot stores across the United States. In another multi-million dollar deal, HP will provide notebooks, desktop PCs and industry-standard HP ProLiant servers to The Huntington Bank.

Additionally, HP is providing the Internal Revenue Service desktop and notebook PCs worth more than $35 million. School districts and colleges are making significant purchases of HP PCs and other systems, including more than 40 new education contracts that together represent more than $175 million in new business. Nearly two out of three of all recent HP education agreements in the United States were competitive wins against Dell and IBM.

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. More information about HP is available at http://www.hp.com.