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Table of Contents Topic Company Profile Industry Profile (Porters Five Forces Included) SWOT Analysis Accounting Analysis

Key Accounting Policies Vertical Common Size Analysis Horizontal Common Size Analysis Analysis of cash flow statement Three Year Ratio Comparison Cross Company Analysis Ratio Analysis with the Industry Summary and Conclusion
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Page No. 3 3 5 6 6 7 7 7 8 9 11 12

Appendices

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Company Profile In 1939, Hewlett-Packard (HPQ) was originated as a privately owned and operated company by William R. Hewlett and David Packard. HPQ made the transition into a publicly traded company on November 6, 1957. In 2001, Compaq performed a merger with Hewlett-Packard. Having the capability to provide multiple solutions (servers, access devices, imaging and printing, storage and IT services), the new HPQ will be in a position of significant competitive advantage comparable to IBM. Today, HPQ is publicly traded on the New York Stock Exchange. Currently, the company is headquartered in Palo Alto, California.1 HPQ currently operated in the following business arena: Enterprise Storage and Servers, HP Services Software, Personal Systems Group, Imagine and Printing Group, HP Financial Services, and Corporate Investments. Hewlett Packard provides a wide variety of computer and peripheral products. This diverse product line includes: personal computers, handheld computer devices, home and business imaging and printing devices, publishing systems, storage and servers, a wide selection of information technology services and software solutions.2
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http://www8.hp.com/us/en/hp-information/about-hp/headquarters.html http://www8.hp.com/us/en/hp-information/analyst-relations/index.html

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Industry Profile Hewlett-Packard is operated in the Diversified Computer Systems industry of the Technology sector and it has many high profile competitors such as: Canon, Dell, IBM, Apple, and Cisco Systems. This industrial sector is growing very fast. In recent years, spending in the US on IT goods and services ranged from $470 billion in 2005, up to $557 billion in 2008, before dipping to an estimated $513 billion for 2009, $564 billion in 2010 and an estimated $609 billion for 2011Comparing these amounts to US GDP figures (from the US Department of Commerce and estimates from Standard & Poors), we find IT spending represented about 3.6% of US GDP in 2009, and may rise toward 4.0% in 2011, reflecting the cyclicality of IT spending. Tech tends to gain steam in stronger years for the economy, and shrink relatively in a bust year such as 2009.3 FIVE FORCES MODEL Competitive Force 1: Threats of New Entrants (Low to moderate) y There is also need for high capital investment if any new competitor wants to enter in the market. y y Product differentiation: there is constant need for technology improvement. Moderate customer switching costs: due to standardization of most of computer components, it becomes easy for customers to change their laptops. Competitive Force 2: Bargaining Power of Buyers (Moderate) y Moderate customer switching costs: due to standardization of most of computer components, it becomes easy for customers to change their laptops. y Low number of suppliers: There are few number of suppliers who are providing hp Compaq products to customers. y Suppliers also operate with high fixed costs which is the main reason of few numbers of suppliers. Competitive Force 3: Bargaining Power of Suppliers (High)

http://www.netadvantage.standardandpoors.com.resources.library.brandeis.edu/NASApp/NetAdvantage/cp/co mpanyIndustryPage.do

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A few larger suppliers: there are few suppliers which are reliable, well known and supply high quality raw material such as NEC, Intel, and Hitachi.

There is also difficulty in imitating specialized technology which becomes source of competitive advantage for suppliers.

Competitive Force 4: Threat of Substitute Products (Moderate to high) y However Dell, Acer, and Samsung provide even cheaper products almost at the same quality, thereby some customers can switch to cheaper substitutes. Competitive Force 5: Rivalry among Existing Firms (High) y High initial capital costs: cost for setup of manufacturing units increased fixed cost which makes difficult for existing companies to leave the industry. y Constant changes in products and prices make the competition even more fierce.

KEY SUCCESS FACTORS (SWOT Analysis) Core Strengths It has prominent brand recognition among the people. Hewlett-Packards primary strength is its business standing. The corporation has a huge amount of cash in hand about $11 billion. Hewlett-Packard is a global enterprise and especially after its merger with Compaq, the huge synergy was created and they became worlds biggest computer hardware and peripherals consort in the world and has ranked 20th in the Fortune 500 list. Hewlett Packard is doing business in more than 170 countries. Due to the fact that it is the dominating dealer of computer hardware it also utilizes this dominating power in printers market, both laser and inkjet. Hewlett Packard has a near to complete product portfolio. Core Weaknesses The company has a long term debt which hinders it from potentially successful technologies. Software wise HPQ has also some weaknesses. Some heavy and complicated software were installed in slow hardware like Touch Smart. Market Opportunities
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Due to recent purchase of EDS HPQ now has more strong position in the market and make it portfolio even more diversified. If the products by the company were supplied at more reasonable prices, there will be more chances of growth as the demand would increase. Market Threats Operating in global market means many more rivals and therefore, the company has to be alarmed of constantly altering technologies as well as addressing the changing customer demands and needs in order to maintain its competitive position. Dell has cheaper computers almost at the same quality. In addition Dell has more effective inventory management system. Many other competitors including Dell are entering the printer business whereas IBM has become a market leader.

Accounting Analysis HPQ is operating in the Diversified Computer Systems industry. Thereby, making it important to focus on strategic necessities within the individual product categories and then manage across the entire portfolio to drive growth while optimizing cost structure.4 HPQ prepares its consolidated Financial Statements according to GAAP. Thus, its management should make estimates, judgments and assumptions which would affect the disclosure of their assets and liabilities. To make these estimates HPQ has followed a thorough process; in the context of the outcome of the company these are very vital. These estimates are based on past experiences and other assumptions that are not readily available from other sources. In the end, the Audit Committee and senior management of HPQ discuss the estimates at hand, and how to disclose this information. Key Accounting Policies HPQ makes many significant estimates and assumptions in different areas for the overall preparation of their Consolidated Financial Statements. The Consolidated Financial Statements
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http://www8.hp.com/us/en/hp-information/analyst-relations/index.html

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of HP include the accounts of HP and its wholly-owned subsidiaries and its controlled majorityowned subsidiaries. The income that the HP generated from the investment in equity in other company where the company does not hold controlling interest just as interest and other in the income statement but not following equity method. According to the note 19, HP has made certain organizational realignments in order to optimize its operating structure. According to the current revenue recognition policies which HP is following from 2009 and 2010, revenues are allocated to different elements of HPs sales according to selling price hierarchy. HP is an electronic computer company which needs to make continuous innovation and differentiation. Therefore, research and development contains a significant portion of total expenditure. In the year 2010 it was 3.5% of net revenue. The Stock-based compensation expense for HP is determined based on the grant-date fair value. HP uses lower of cost or market for inventory valuation and computed cost on a first in, first out (FIFO) basis. The depreciation for HPs property, plant and equipment is computed based on straight line or accelerated methods. HP recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. According to SFAS No, 142, Goodwill and Other Intangible Assets, goodwill is valued with an indefinite life with annual impairments. The goodwill is recorded at fair value and the fair value is determined by weighting the income and market approaches. Vertical Common-Size Statement of Income (Exhibit 1) Earnings before taxes remain stable over the year 2008-2010. Thereby, provision for taxes is also remains stable over the period of 2008-2010. Net income as a percentage of sales decreases a little over the period of 2008-2010. The reason for this decrease can be explained by the increase cost of goods sold over the period of 2008-2010. Horizontal Common-Size Statement of Income (Exhibit 2)

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Net revenue decreases in 2009 but increases in 2010 in comparison to 2008. There is a material increase in areas of cost of sales, amortization of purchased intangible assets, restructuring charges, and acquisition related charges. There is a decrease in areas of cost of product, selling and administrative expense, and research and development. Net earnings increase in 2010 but decreases in 2010. Analysis of Statement of cash flows (Exhibit 3) Cash provided by operations of HPQ was the major source of cash. This operating cash flow more than offset the cash outflow for investing activities and the outflow for financing activities. Cash flow from operations related to net income and depreciation represented substantially all of the cash flow from operations. Cash used for additions to property, plant, equipment and payments made in connection with business acquisitions, represented more than the total cash used by investing activities. Cash used for repurchase of stock represented over 200% of the total cash used for financing activities. Possibly, some of the repurchase stock was related to proceeds from exercise of stocks options and other stock issuances. One of the reasons for expensing stock options is that typically a company will repurchase stock and then issue stock with exercise of options. Three Year Ratio Comparison (Exhibit 4) Profitability Ratio The profitability ratios help us to evaluate four dimensions related to profitability which are, operating efficiency, asset productivity, rate of return on assets and the rate of return on equity. These figures will convey us how profitable HPQ is as its own company. The gross profit margin, operating expense ratio and net profit margin convey us information about the companies operating efficiency. From 2008-2010, HPs gross profit margin has been diminishing but not so significantly. Hewlett-Packards operating expense ratio did not vary significantly. Return on assets ratio shows us income as percentage of the average total assets available to generate that income. ROA did not fluctuate significantly; it varies between 6.72 and 7.35. Asset utilization ratios
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We also looked at the asset turnover, return on assets and the return on equity for profitability analysis. The asset turnover ratio for HPQ dropped (not significant drop) from 2008-2010 due to the large increase in total assets. This made it difficult for HP to utilize their assets properly. Between 2008 and 2010 HPQ has also increase the inventory turnover from 11.23 to 15.21 times a year. So, HPQ increased its efficiency in managing the inventory over 3 year course. Leverage Ratio Long term debt to capital was l9.7 in 2008 but then it jumped to 34.3 and decreased to 26.35 in 2010. Total debt to common equity was fluctuating significantly. While it was 45.8 in 2008 it decreased to 38.2 in 2009 and again increased 53.49 in 2010. Times interest earned and fixed charge coverage was very good in all three years. Liquidity Ratio Quick ratio improved from 2008 to 2009 but it decreased again 2010. Current ratio improved in 2009 but again decreased in 2010. Account receivable days increased in 2009. Most probably due to fact that it extended the credit terms or maybe it cannot collect receivables effectively as in 2008. Inventory days held decreased significantly from 32.49 days to 24 days in 2010. Inventory held at HPQ warehouses decreased from 32.18 days to 24 days. Its account receivable turnover, increased but not significantly over 3 year course 6.99 to 7.2. Cash dividend coverage ratio increased from 19.8 to 26 and then decreased to 20.51 in 2010. Investor ratio The Current P/E ratio increased slightly in 2010 in relation to 2008, after increasing materially in 2009. The Price/Book Ratio was relatively stable over the period of 2008-2010. EPS per year decreased slightly in 2009 in relation to 2008, but increased materially in 2010 in relation to both 2007 and 2009. The Dividend yield decreased materially in 2009 in relation to 2008 but increased slightly in 2010 in relation to 2009. The Dividend payout decreased materially in 2010. The cash Dividend Coverage ratio increased materially in 2009 in relation to both 2008 and2010. Cross company analysis (Exhibit 5) Profitability Ratio
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Return on Equity: It is bottom line measures for the investors. ROE measures the profit earned for each dollar invested in the firms stock by investors. As apple retired all its debt in 2004, it can save its interest cost. Therefore, Apple has shown a positive trend in ROE since 2004, and thus appreciates its value. IBM, HP and Dell all show an erratic trend, with Dell having the best performance of the three firms in this ratio for 2006 and 2008. Earnings per Share: EPS measures by the net income over no. of outstanding shares. Over the years EPS for IBM, Apple and HP has steadily increased from 2005 to 2010. Dell has fluctuating EPS with an average EPS of $1.18. Liquidity In terms of liquidity measures (figure 1), we can observe that the four firms do not move in synch when we analyze the trends over the last six years. In this area, this is due to the companys having different approaches to their short term operations, in terms of inventory turnover, short term assets and short term liabilities.
Figure 1: Liquidity Ratio - Trends
4 3 Ratios 2 1 0 2005 2006 2007 2008 2009 2010 Years IBM DELL APPLE HP 0.4 0.3 Ratio 0.2 0.1 0 2005 2006 2007 2008 2009 2010 Year IBM DELL APPLE HP

Figure 2: Leverage Ratio - Trends

Leverage Ratio Regarding the leverage ratio (figure 2), we see a similar trend between Hewlett Packard and Dell during the five year period being analyzed; these two companies show a tendency to the increased use of debt to finance their investment. But the leverage ratio for IBM has steadily increased from 2005 to 2010. But in 2009, for IBM debt totaled $26.1 billion, compared with $33.9 billion at year-end 2008.The drop was largely due to decreases in the short-term debt from $11236 million to $4168 million. Compared to cash account from $12741 million to $12183 million, these reflected that IBM was in very wealthy financial health and have enough cash to pay off its short-term debts. For IBM Apple, as we saw in previous sections, does not have outstanding debt during these years and thus has a different trend. Investor Ratio: 9|P a ge 9

Price-Earnings Ratio: It can be estimated by market price per share over EPS. IBM, Dell, Apple and HP all have fluctuating Price-Earnings Ratio with an average of 13.85, 19.55, 27.93, and 16.09 respectively (figure 3). Therefore, clearly Apple is ahead of the other companies in terms of average Price/Earnings Ratio from 2005 to 2010.
Figure 3: Price/Earning Ratio - Trend
50 40 30 20 10 0 2005 2006 2007 2008 Year 2009 2010
300

Figure 4: Year End Stock price- Trend


Price per share IBM DELL APPLE HP
200 100 -

IBM DELL APPLE HP

Ratio

2005 2006 2007 2008 2009 2010 Year

Year End stock Price: Finally, all the performance of the company can be usually observed through its stocks prices, as presented in the table 1. It is important to notice how the stock prices fell for all four of the firms during 2008 (figure 4). This can be attributed to the effects of the financial crisis.

Ratio Comparison with the Industry (Exhibit 6) Profitability Return on assets decreased materially from 2008 to 2009 but recovered somewhat again in 2010. In 2010 its return on assets was lower than industry average. Costs of Goods Sold to Sales were not fluctuating significantly over the 3 year course. And it was lower than industry average which puts HPQ ahead of competitors. Gross Profit Margin decreased from 2008 to 2009 but not too significantly. It recovered somewhat in 2010 and it was still above the industry average Net profit margin decreased materially from 2008 to 2009. It recovered somewhat in 2010. Pretax margin decreased materially from 2008 to 2009 but again showed small amount of recovery in 2010. Operating profit margin was constant in 2008 and 2009, but increased to 9.11% in 2010. Asset Utilization There were not significant changes in asset turnover from 2008 to 2009. It decreased from 2008 to 2009 materially and recovered from 1.00 to 1.05 in 2010. But asset turnover was significantly below the industry average. Inventory turnover ratio improved significantly over the 2 year
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period from 11.23 to 15.21 Accounts receivable turnover ratio worsened in 2009 but it improved somewhat in 2010. However it was far below the industry average in 2010 which was 23.26 Liquidity Quick ratio improved from 2008 to 2009 but it decreased again 2010. This ratio was below the industry average in 2010 which was 1.04. Current ratio improved in 2009 but again decreased in 2010. It has the lowest current among its main rival companies. Its ratio is lower than industrys average. Account receivable days increased in 2009. Most probably due to fact that it extended the credit terms or maybe it cannot collect receivables effectively as in 2008. But this ratio was better than industry average in 2010. Inventory days held decreased significantly from 32.49 days to 24 days in 2010 and in terms of this metric HPQ was performing better than its peers. Cash dividend coverage ratio increased from 19.8 to 26 and then decreased to 20.51 in 2010. It was below industry average which was 25.17

Leverage Ratio Long term debt to capital was l9.7 in 2008 but then it jumped to 34.3 and decreased to 26.35 in 2010 which was close to industry average. Total debt to common equity was fluctuating significantly. While it was 45.8 in 2008 it decreased to 38.2 in 2009 and again increased 53.49 in 2010 which was still below the industry average. Investor Analysis Total debt to common equity and long term debt to common equity is materially lower for HP than for the industry. The price/earnings ratio is slightly lower for the HP than for the industry and considering the profitability ratio the price/earnings ratio is justified. The EPS for HP is slightly higher than the industry. The dividend payout is materially lower than the industry which means HP is retaining their earnings for making investment in R&D and continuous innovation that is essential for the survival for HP in this highly competitive industry.

Summary and Conclusion


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In general, among the years 2009 appears to be good for HP in terms of liquidity. The debt position appears to be good. This appears to be the case from both an income statement and a balance sheet viewpoint. Profitability appears to be good.

In the profitability area, there were a numbers of slight decline in 2010 in relation to both 2008 and 2009. The profitability declines were not substantial as related restructuring charges and acquisition charges were not increase materially. The investor analysis is favorable towards HP.

According to all above mentioned and the tables presented below HP was performing slightly above industry average. It was outperforming most of the rivals in terms of profitability, leverage and liquidity ratios. After thorough thought and analysis (Even though, HP seems logical investment to make) we arrived to one logical conclusion. Sell HP stock and buy APPLE stock! Appendices Exhibit 1: Vertical Common-Size Statement of Earnings
HEWLETT-PACKARD COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings
For the fiscal years ended October 31 2010 2009 2008

Net revenue: Products Services Financing income Total net revenue Costs and expenses: Cost of products Cost of services COGS Financing interest Research and development Selling, general and administrative Amortization of purchased intangible assets Restructuring charges Acquisition-related charges Total operating expenses Earnings from operations

67.28% 32.39% 0.33% 100.00% 51.62% 24.38% 76.00% 0.24% 2.35% 9.99% 1.18% 0.91% 0.23% 90.89% 9.11%

64.64% 35.03% 0.33% 100.00% 49.33% 26.80% 76.12% 0.28% 2.46% 10.14% 1.38% 0.56% 0.21% 91.15% 8.85%

77.47% 22.22% 0.31% 100.00% 58.58% 16.92% 75.50% 0.28% 2.99% 11.26% 0.85% 0.23% 0.03% 91.15% 8.85%

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Interest and other, net Earnings before taxes Provision for taxes Net earnings

-0.40% 8.71% 1.76% 6.95%

-0.63% 8.22% 1.53% 6.69% 8.85% 1.81% 7.04%

Exhibit 2: Horizontal Common Size Statement of Earnings


HEWLETT-PACKARD COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings
For the fiscal years ended October 31 2010 2009 2008

Net revenue: Products Services Financing income Total net revenue Costs and expenses: Cost of products Cost of services COGS Financing interest Research and development Selling, general and administrative Amortization of purchased intangible assets Restructuring charges Acquisition-related charges Total operating expenses Earnings from operations

92.48% 155.21% 112.97% 106.48% 93.83% 153.40% 107.18% 91.79% 83.52% 94.44% 146.64% 423.70% 714.63% 106.18% 109.61%

80.76% 152.58% 101.89% 96.78% 81.48% 153.26% 97.57% 99.09% 79.57% 87.15% 155.93% 237.04% 590.24%

100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100% 100% 96.78% 100% 96.78% 100%

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Interest and other, net Earnings before taxes Provision for taxes Net earnings

104.78% 103.22% 105.19%

100% 100% 91.97% 100%


89.90% 81.86%

Exhibit 3: Analysis of Statement of Statement of Cash Flows


HEWLETT-PACKARD COMPANY AND SUBSIDIARIES For the fiscal years ended October 31 In millions Cash flows from operating activities: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Provision for doubtful accountsaccounts and financing receivables Provision for inventory Restructuring charges Deferred taxes on earnings Excess tax benefit from stock-based compensation Other, net Changes in assets and liabilities: Accounts and financing receivables Inventory Accounts payable Taxes on earnings Restructuring Other assets and liabilities Total $24,750 $13,001 $1,909 $776 $624 $2,054 $1,349 -$749 $130 -$3,211 $1,351 $898 $1,691 -$2,736 -$1,945 2010 $8,761 4,820 668 156 189 1,144 197 -294 169 -2,398 -270 -698 723 -1,334 89 2009 $7,660 4,780 635 345 221 640 379 -162 22 -549 1,532 -153 733 -1,237 -1,467 2008 $8,329 3,401 606 275 214 270 773 -293 -61 -264 89 1,749 235 -165 -567

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Net cash provided by operating activities Cash flows from investing activities: Investment in property, plant and equipment Proceeds from sale of property, plant and equipment Purchases of available-for-sale securities and other investments Maturities and sales of available-for-sale securities and other investments Payments made in connection with business acquisitions, net Proceeds from business divestiture, net Net cash used in investing activities Cash flows from financing activities: Issuance (repayment) of commercial paper and notes payable, net Issuance of debt Payment of debt Issuance of common stock under employee stock plans Repurchase of common stock Excess tax benefit from stock-based compensation Dividends Net cash used in financing activities (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

$39,892 -$10,818 $1,522 -$389 $651 -$19,741 $125 -$28,650 $2,315 $13,077 -$5,876 $6,264 -$25,802 $749 -$2,333 -$11,606 -$364 $34,725 $34,361

11,922 -4,133 602 -51 200 -8,102 125 -11,359 4,156 3,156 -1,323 2,617 -11,042 294 -771 -2,913 -2,350 13,279 $10,929

13,379 -3,695 495 -160 171 -391 -3,580 -6,856 6,800 -2,710 1,837 -5,140 162 -766 -6,673 3,126 10,153 $13,279

14,591 -2,990 425 -178 280 -11,248 -13,711 5,015 3,121 -1,843 1,810 -9,620 293 -796 -2,020 -1,140 11,293 $10,153

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Exhibit 4: Three-year Ratio Comparison


Unit Profitability Ratios Return on Per Share Return on Assets Cash Flow To Sales Gross Profit Margin Operating Profit Margin Pretax Margin Net profit Margin Cost of Goods Sold To Sales ROE Asset Utilization Ratios Asset Turnover Inventory Turnover Leverage Ratios Total Debt to Common Equity Long Term Debt to Common Equity Long Term Debt to Total Capital Total Debt to Total Assets Total Capital to Total Assets Times Interest Earned Fixed charge coverage Liquidity Ratios Quick Ratio Current Ratio Cash & Equivalent to Current Assets Accounts Receivable Days Receivables to current assets Inventories Days Held Investor Analysis Current P/E Ratio Price/Book Ratio EPS Dividend yield Dividend Payout Cash Dividend Coverage Ratio % % % % % % % % % Times per year Times per year % % % % % Times per year Times per year N/A N/A N/A Days N/A Days N/A N/A $ % % % 2010 21.36 7.32 12.58 22.30 9.11 8.71 6.95 76.00 21.49 1.05 15.21 53.49 36.07 26.35 67.20 32.80 37.33 27.31 0.66 1.10 0.20 50.71 0.34 23.99 11.63 2.41 3.78 0.7 8.80 20.51 2009 21.20 6.72 12.68 23.88 8.85 8.22 6.69 76.12 19.22 1.00 12.45 38.20 33.60 34.30 64.50 35.50 29.88 16.77 0.76 1.22 0.25 53.32 0.31 29.32 14.18 2.66 3.21 0.68 10.00 26.00 2008 21.29 8.25 11.66 24.50 8.85 8.85 7.04 75.50 21.30 1.17 11.23 45.80 19.70 19.70 65.60 34.40 32.83 23.42 0.56 0.98 0.20 46.79 0.33 32.49 10.86 2.11 3.35 0.92 9.60 19.80

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Exhibit 5: Competitor Analysis

Table 1: Financial Ratios (2005-2007) Ratios IBM Size - Total Assets(Million USD) Size - Total Sales(Million USD) Age (Number of years in operation) Liquidity/Current Ratio Acid/Quick Ratio (Cash/Current Liabilities) Leverage Ratio - Total Debt/Total Assets Leverage Ratio - Long-term Debt/Total Assets Leverage Ratio - Short-term Debt/Total Assets Leverage Ratio - Total Debt / Equity Return on Equity (ROE)(%) Earnings per Share Price-Earnings Ratio (P/E) Year-end stock prices for the last five years 105748 91134 95 1.30 0.36 0.21 0.15 0.07 0.68 24.29 4.87 16.78 82.20 2005 DELL 23215 49205 21 1.20 0.31 0.02 0.02 0 0.08 46.92 1.18 35.39 41.76 APPLE 11516 13931 29 2.95 1.00 0 0 0 0 17.9 1.56 34.37 53.61 HP 77317 86696 67 1.38 0.44 0.06 0.03 0.02 0.12 6.11 0.84 33.38 28.04 IBM 103234 9124 96 1.11 0.20 0.22 0.13 0.09 0.80 30.82 6.11 16.03 97.15 DELL 23109 55908 22 1.11 0.44 0.02 0.02 0 0.12 86.51 1.46 20.08 29.31 2006 APPLE 17205 19315 30 2.24 0.99 0 0 0 0 19.9 2.3 33.91 76.98 HP 81981 91658 68 1.35 0.46 0.06 0.03 0.03 0.14 16.25 2.2 17.6 38.7 IBM 120431 98786 97 1.20 0.34 0.29 0.19 0.10 1.24 36.57 7.18 15.06 108.10 2007 DELL 25635 57420 23 1.12 0.54 0.03 0.02 0.01 0.17 59.68 1.14 21.25 24.22 APPLE 25347 24006 31 2.36 1.01 0 0 0 0 24.1 3.9 39.05 153.47 HP 88699 104552 69 1.21 0.29 0.09 0.06 0.04 0.21 18.85 2.7 19.1 51.7

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Exhibit 5: Competitor Analysis (Cont.)

Table 1: Financial Ratios Cont. (2007-2008) Ratios Size - Total Assets(Million USD) Size - Total Sales(Million USD) Age (Number of years in operation) Liquidity/Current Ratio Acid/Quick Ratio (Cash/Current Liabilities) Leverage Ratio - Total Debt/Total Assets Leverage Ratio - Long-term Debt/Total Assets Leverage Ratio - Short-term Debt/Total Assets Leverage Ratio - Total Debt / Equity Return on Equity (ROE)(%) Earnings per Share ($) Price-Earnings Ratio (P/E) Year-end stock prices for the last five years ($) IBM 109524 103630 97 1.15 0.30 0.31 0.21 0.10 2.52 58.83 8.93 9.42 84.16 2008 DELL APPLE 27561 61133 24 1.07 0.42 0.02 0.01 0.01 0.16 78.90 1.31 15.3 20.04 39572 32479 32 2.46 0.84 0 0 0 0 23.0 5.4 21.21 113.66 HP 113331 118364 70 0.98 0.19 0.16 0.07 0.09 0.46 21.39 3.3 11.6 38.3 IBM 109022 95758 99 1.36 0.34 0.24 0.20 0.04 1.15 74.37 10.01 13.08 130.90 2009 DELL APPLE 26500 61101 25 1.36 0.56 0.08 0.07 0 0.47 58.01 1.25 7.6 9.5 47501 42905 33 2.74 0.46 0 0 0 0 26.0 9.1 20.41 185.35 HP 114799 114552 71 1.22 0.31 0.14 0.12 0.02 0.39 18.91 3.1 15.3 47.5 IBM 113452 99870 100 1.18 0.26 0.25 0.19 0.06 1.24 64.93 11.52 12.74 146.76 DELL 33652 52902 26 1.28 0.56 0.12 0.1 0.02 0.72 25.4 0.73 17.67 12.9 2010 APPLE 75183 65225 34 2.01 0.54 0 0 0 0 29.3 15.1 18.66 283.75 HP 124503 126033 72 1.1 0.66 0.18 0.12 0.06 0.55 21.66 3.7 11.4 42.0

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Exhibit 6: Ratio Comparison with Industry


Unit Profitability Ratios Return on Per Share Return on Assets Cash Flow To Sales Gross Profit Margin Operating Profit Margin Pretax Margin Net profit Margin Cost of Goods Sold To Sales ROE Asset Utilization Ratios Asset Turnover Inventory Turnover Leverage Ratios Total Debt to Common Equity Long Term Debt to Common Equity Long Term Debt to Total Capital Total Debt to Total Assets Total Capital to Total Assets Times Interest Earned Fixed charge coverage Liquidity Ratios Quick Ratio Current Ratio Cash & Equivalent to Current Assets Accounts Receivable Days Receivables to current assets Inventories Days Held Investor Analysis Current P/E Ratio Price/Book Ratio Price/Cash Flow Ratio EPS Dividend yield Dividend Payout Cash Dividend Coverage Ratio 2010 Industry average 2010 22.18 7.73 9.86 22.21 8.55

% % % % % % % % % Times per year Times per year % % % % % Times per year Times per year N/A N/A N/A Days N/A Days N/A N/A N/A $ % % %

21.36 7.32 12.58 22.30 9.11 8.71 6.95 76.00 21.49 1.05 15.21 53.49 36.07 26.35 67.20 32.80

81.00 10.70 1.41 23.26 84.78 49.86 26.95 68.00 28.97

0.66 1.10 20.00 50.71 0.34 23.99 5.59 1.26 3.42 3.70 1.90 8.80 20.51

1.04 1.36 33.78 62.03 35.66 26.82

2.46 6.85 2.86 20.48 25.17

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