Goodwill and Purchased Intangible Assets

6 Months Ended

Apr. 30, 2011

Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

Note 5: Goodwill and Purchased Intangible Assets

Goodwill

Goodwill allocated to HP's business segments as of April 30, 2011 and changes in the carrying amount of goodwill for the six months ended April 30, 2011 are as follows:

	Services		Enterprise Servers, Storage and Networking		HP Software			Personal Systems Group			Imaging and Printing Group			HP Financial Services		Corporate Investments			Total

	In millions
Balance at October 31, 2010	$	16,967	$	6,610	$	7,545		$	2,500		$	2,456		$	144	$	2,261		$	38,483
Goodwill acquired during the period		—		—		189			—			—			—					189
Goodwill adjustments		265		1,487		(254	)		(2	)		(1	)		—		(1,405	)		90

Balance at April 30, 2011	$	17,232	$	8,097	$	7,480		$	2,498		$	2,455		$	144	$	856		$	38,762

During the second quarter of fiscal 2011, HP recorded approximately $189 million of goodwill relating to the acquisition of Vertica Systems, Inc. ("Vertica") based on a preliminary allocation of the purchase price. In connection with certain fiscal 2011 organizational realignments, HP reclassified goodwill related to HP's networking business from Corporate Investments to Enterprise Servers, Storage and Networking ("ESSN") and goodwill related to the communications and media solutions business from HP Software to Services. Additionally, during the six months ended April 30, 2011, HP recorded an increase to goodwill as a result of currency translation related to an acquired subsidiary whose functional currency is not the U.S. dollar.

Purchased Intangible Assets

HP's purchased intangible assets associated with completed acquisitions are composed of:

	April 30, 2011							October 31, 2010

	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	In millions
Customer contracts, customer lists and distribution agreements	$	7,521	$	(4,317	)	$	3,204	$	7,503	$	(3,864	)	$	3,639
Developed and core technology and patents		5,938		(3,751	)		2,187		5,763		(3,384	)		2,379
Product trademarks		347		(257	)		90		346		(239	)		107

Total amortizable purchased intangible assets		13,806		(8,325	)		5,481		13,612		(7,487	)		6,125
In-process research and development		177		—			177		301		—			301
Compaq trade name		1,422		—			1,422		1,422		—			1,422

Total purchased intangible assets	$	15,405	$	(8,325	)	$	7,080	$	15,335	$	(7,487	)	$	7,848

During the first six months of fiscal 2011, HP recorded approximately $53 million of purchased intangible assets related to the Vertica acquisition based on a preliminary allocation of the purchase price.

Estimated future amortization expense related to finite-lived purchased intangible assets at April 30, 2011 was as follows:

Fiscal year:	In millions

2011 (remaining six months)	$	711
2012		1,320
2013		1,167
2014		842
2015		708
2016		550
Thereafter		183

Total	$	5,481

- Definition

Discloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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