News release

HP Expects to Achieve $3 Billion of Merger Cost Savings in Fiscal 2003, One Year Ahead of Schedule

Organizes Executive Team to Leverage Operational Strengths, Improve Collaboration Across Business Units

HP (NYSE:HPQ) today announced that it expects an accelerated timeframe for successfully completing its merger integration process and achieving $3 billion of annualized cost savings by the end of fiscal year 2003, one year ahead of schedule. At today's Securities Analyst Meeting here, HP told shareowners that it already has achieved $2.4 billion of annualized savings -- 80 percent of the targeted $3.0 billion of total annualized savings.

"The careful planning that went into the merger is beginning to reap the benefits we expected," said Carly Fiorina, HP chairman and chief executive officer. "The integration process is now one year ahead of schedule, as we continue to drive improvements in our cost structures and in our competitive position."

To further drive operational efficiency and fully leverage the combined strength of the company, HP also announced new roles for certain of its senior managers.

"Winning and growing in the marketplace require that we leverage all of our collective talents and capabilities to work as one company on behalf of our customers," said Fiorina. "We're creating a management model that places equal emphasis on individual business unit performance and importantly, cross-company functional and market segment leadership to achieve operational improvements. We are making these changes to both improve our efficiency and deliver greater value for our customers."

The following executives will continue in their existing roles, reporting to Fiorina: Duane Zitzner, executive vice president of Personal Systems Group (PSG); Vyomesh Joshi, executive vice president of the Imaging and Printing Group (IPG); Peter Blackmore, executive vice president of Enterprise Systems Group (ESG); Ann Livermore, executive vice president of HP Services (HPS); Bob Wayman, executive vice president and chief financial officer; Bob Napier, executive vice president and chief information officer; and Susan Bowick, executive vice president of human resources and workforce development.

As a result of merger integration progress and to further drive operational efficiencies across all business units, executive vice presidents Mike Winkler, Jeff Clarke and Webb McKinney will each take on new leadership roles reporting to Fiorina.

Winkler will become executive vice president and chief marketing officer. He will oversee global brand and communications, global alliances and total customer experience (TCE) teams. Business group marketing vice presidents will now dual report into Winkler and their business units. Allison Johnson, senior vice president of global brand and communications, will report to Winkler with responsibility for all advertising and communications.

Clarke will move from jointly leading the post-merger integration team to a new role as executive vice president for supply chain and customer operations. He will manage HP's supply chain, customer-to-cash, procurement and logistics operations and teams. Clarke also will manage HP's $30 billion direct and $10 billion indirect material sourcing functions.

McKinney will become executive vice president of merger integration and organizational effectiveness, expanding his merger integration role to include overall responsibility for the effectiveness of strategic change management and company governance. Included in McKinney's new organization is Debra Dunn, senior vice president of corporate affairs.

To create a stronger link between HP's short- and long-term technology strategy, Shane Robison, executive vice president and chief technology and strategy officer, will take on added responsibility for HP Labs, which will continue to be directed by Dick Lampman, senior vice president, research.

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 Corporation on May 3, 2002. More information about HP is available at http://www.hp.com.