This summary is based on the third quarter fiscal 2007 earnings call conducted by Hewlett Packard Company (HPQ: chart) on August 16, 2007.

Management

Chairman, CEO and President: Mark Hurd
EVP and Chief Financial Officer: Cathie Lesjak
VP of Investor Relations: Jim Burns

Key Investors Issues

- EPS, including one time charges, rose to 66 cents from 48 cents in prior year.
- Quarterly revenue rose to $25.38 billion from $21.89 billion in previous year.
- For Q4, HP projects non-GAAP EPS of 80 cents to 81 cents, up 18% to 19% from last year.

Third Quarter Fiscal 2007 Financial Highlights

The revenue for the third quarter totaled $25.4 billion, up 16% year-over-year or up 12% in constant currency.

Looking at revenue by geography; each regions grew in double digits, with Asia-Pacific up 22%; EMEA up 16%; and Americas up 14%. Adjusting for currency, revenue was up 18% in Asia-Pacific, 9% in EMEA, and 13% in the Americas. The company continues to benefit from its broad geographic reach with 65% of the revenue coming from outside the U.S. In fact, revenue from the BRIC countries, Brazil, Russia, India, and China, grew 35% in Q3 and now accounts for 8% of total revenue.

Third-quarter gross margin was 24.5% of revenue, unchanged from second quarter.

Compared to a year ago, gross margin percentage was down by 30 basis points, driven by strong growth in the Personal Systems Group and by shifts in product mix within Imaging and Printing. These factors were only partially offset by favorable pricing of commodity components and by a higher percentage of the company''s revenue coming from software.

Non-GAAP operating expenses for the quarter were 15.5% of revenue, an improvement of 170 basis points compared with a year ago and flat sequentially.

In absolute dollars, operating expenses grew only 4.5% year-over-year to $3.9 billion, less than one-third the rate of revenue growth. Adjusting for currency, expenses grew by only 2.3% year-over-year even as the firm absorbed the operating expenses associated with eight acquisitions. Going forward, the company will continue to invest in new areas that have the potential to drive future growth, while at the same time remaining focused on optimizing its cost structure.

Non-GAAP OI&E yielded a pretax income of $170 million or roughly 5 cents per share.

The increase reflects gains on real estate transactions during the quarter.

The non-GAAP tax rate was 22.4% in third quarter.

This reflects roughly 2 cents per share in incremental tax expenses associated with nonrecurring items. The firm expects its non-GAAP tax rate to return to 20% in Q4 and then to go up to 21% in fiscal 2008.

Third quarter non-GAAP EPS was 71 cents, up 37% from the 52 cents that was reported one year ago.

GAAP EPS was 66 cents, which includes $134 million or 5 cents per share in after-tax adjustments primarily related to the amortization of purchased intangibles that were excluded from the non-GAAP results.

HP-owned inventory ended Q3 at $8 billion, up $728 million sequentially and up $542 million year-over-year.

Inventory now stands at 38 days of supply, down 3 days from that with the year ago but up 4 days sequentially. The company believes that its current inventory levels are appropriate as it heads into its seasonally strongest quarter.