Revenue, earnings, operating margins and similar items at the Company levels are sometimes expressed on non-GAAP basis and have been adjusted to exclude certain items including amongst other things, amortization of purchase intangible asset, restructuring charges and acquisition related chargers. The comparable GAAP information on a reconciliation of non-GAAP amounts to GAAP are included in the tables and in the slide presentation accompanying today’s earnings release. Both of which are available on HP Investor Relations website at www.hp.com.

I’ll now turn the call over to Meg.

Meg Whitman

Thank you, Rob and thanks to all of you for joining us today. As we discussed during our security analyst meeting in October, fiscal 2013 is the second year in a multiyear journey to turn HP around. You’ll recall that I referred to fiscal 2013 as a six and rebuild year that was set HP up for recovery and expansion in 2014. Since announcing our turnaround plans, we’ve done what we said we would do. We have to find a clear strategy for the business, we’ve made significant progress in bringing our costs in line with revenues and most importantly, we’ve exceeded the financial performance we said we would deliver.

With the first quarter of 2013 behind us, we’re starting to see some traction in our performance as a result of the actions we took in 2012 to lay the foundation for HP’s future. While the results in the first quarter were not what we want them to be, we did better than we expected. But let me repeat what I’ve said so many times before, HP’s turnaround will not be linear and our primary focus is deliver on our outlook for the full-year. That means continuing to implement critical programs to strengthen our balance sheet, optimize our supply chain, feed innovation into commercialization and demonstrate our product leadership across our markets.

In the first quarter HP delivered $0.82 in diluted non-GAAP earnings per share, exceeding our financial outlook of $0.68 to $0.71 per share. This is tangible proof that we have the right plan in place and that we’re successfully delivering on it. Performance in the quarter was driven by improved execution as well as improvement in our channel and go-to-market efforts.

Additionally, the restructuring program we announced in May continues to deliver results. The restructuring program had a meaningful impact on the bottom line in the first quarter and we expect that will accelerate as we move through fiscal 2013 and into fiscal 2014. In addition to the financial impact, we are seeing the benefits of the streamlined and more engaged organization translate into crisp execution of the business strategies.

As I said before, all this comes down to improving cash flow. In the first quarter, cash flow from operations was $2.6 billion, up 115% over the prior year. As we detailed in October, we are maintaining our disciplined approach to capital allocation with a focus on rebuilding our balance sheet. After returning more than $0.5 billion to investors in the form of share repurchases and dividends in the first quarter, we improved our operating companies net debt position for the fourth successive quarter by more than a $1 billion to $4.7 billion.

Now, let me turn to our business group performance in the quarter, starting with the Enterprise Group. Overall, I would have to say that I was pleased with the performance improvements the Enterprise Group made during the quarter. We are driving incredible product innovation in servers, storage and networking that is really resonating with customers who are grabbling to meet the complex needs of the new style of IT.

Revenue from our converged storage products increased 18% over the prior year, which included revenues from three part that was up 21% over the prior year as we continue to innovate.

During the quarter, we launched our most significant set of new stores platforms in over a decade, the industry’s first converged store solutions that break through complexities and inefficiencies with a single architecture. These solutions including the new HP 3PAR mid-tier storage and StoreOnce backup product are already gaining traction with our customers.

In servers, we have stabilized our core server business as our Gen8 product ramped in the quarter due to improved channel execution and better options of tax rate. As a result, we expect to grow market share by nearly 1 point in x86 servers over the prior year. In addition, HP ProLiant has been the number one server brand for 67 quarters in a row with an estimated 32.1% of total x86 unit shipments share in the fourth calendar quarter.

Networking [share] continues the sustained revenue growth, up 6% year-over-year after normalizing for divestiture and we believe gaining modest share in the quarter. And our technology services business, which we are now reporting as part of the Enterprise group continue to deliver strong profitability.

I was also pleased with the performance improvements we saw in printing. We grew margins by 3.9 points over the prior year as new initiatives to drive innovation and implement new business models took hold. We launched our new multi function printers and document workflow products in the quarter. These new products are really paying off. In the fourth calendar quarter, we saw a year-over-year hardware share gains of four points in All-in-One products and three points in multi function printers.

Overall, we grew ink share by two points sequentially over the prior quarter. This was driven by our ink in the office program and by products like Officejet Pro, which saw unit growth of 32% year-over-year. We expect that our recently launched Officejet Pro X powered by our revolutionary Page-Wide Array technology will further extend our lead, particularly among small and medium sized business customers. Finally, we are seeing continued strength in (inaudible) program, which has now been expanded to over 120 emerging markets. In conventions printer placements grew over 350% over the prior year, clearly our strategies are driving our printing to where it needs to be. In personal systems against the backdrop of overall PC market contraction in the fourth calendar quarter, we gained 1.4 points of market share in PC’s over the prior year, including a 4.6 point gain in the U.S.

On the back of our strong execution in the Windows 8 roll-out, we once again, held our position as the world’s leading PC maker. We have really ramped up our innovation in the personal systems base with a particular focus on the enterprise. We announced the EliteBook Revolve, the first major convertible design refresh for commercial managed IT in more than five years. The Revolve was named the best notebook at the consumer electronic show in 2013 and we efficiently released the HP ElitePad 900, the world’s first tablet optimized for the enterprise and we are seeing very strong interest for the ElitePad from current and new customers alike.

Finally, we introduced our first notebook powered by the Google Chrome platform. It is first step in building out a multiple operating system strategy and our personal systems business will allow HP to effectively meet the needs of both the enterprise and the consumer.

Turning to enterprise services, the new leadership team led by Mike Nefkens has moved quickly to stabilize the business and with Q1 margins of 1.3%, we are on track to deliver full-year margins in the target range of 0% to 3%. The expected revenue runoff in the key four accounts we highlighted at our security analyst meeting was somewhat delayed and we did a good job managing and selling into these accounts.

This is an addition to higher than expected non-services revenue, net total enterprise services exceeded our expectations for the quarter. It is still early days, but I believe ES is on track to deliver on a long term recovery plan represented in October.

In software we saw continued strength in our big data analytics business including high double digit growth in (inaudible) over the prior year We also saw a strong double digit growth in security where we have momentum building for the rest of fiscal 2013. Now as I have said many times our channel partners are critical to our success so we’re also making significant investment to make our channel program, simpler, more profitable and more consistent for our channel partners.

At our global partner conference, earlier this week we announced significant changes to our partner programs to address what they want from us, a simplified compensation model, higher rebates or higher special designations and new IT investment. They also want more time to use their marketing development fund and they want simplified sales and technical certifications.

In addition we’re rolling out a hew platform to improve communication and joint business planning with our channel partners, of course the other critical piece to our turn around is our people. My experience with turn around is that happen from the inside out, if we can mobilize HP’s more than 300,000 employees I truly believe there is nothing we can’t do and I have to say that I am seeing that turn.

Just a couple of weeks ago we brought together the company’s top 1000 leaders for our leadership meeting, the passion and enthusiasm I saw for the future of this company was toppable. And I for one walked away more energized than even. Turn arounds also happen with all the new customers believe, when they believe in the products services and consistence of theirs partners and providers.

In Hp’s case customers are really starting to believe. Around the world we saw a number of significant customer wins in the quarter, including HP enterprise services announced the contract of $543 million with the US department of (inaudible). The program will procure and deploy in management system to assist in the automation and improvement of operations and veteran healthcare services.

Luxottica Group, the global leader in eyewear tapped HP to manage its data center environment. HP will work to create a more agile, secure and scalable technology in structure to help them migrate to a cloud computing environment.

AllDigital, a leading digital broadcasting solution provider selected HP StoreAll Storage to support its future business growth, improve its cloud storage performance and reduce infrastructure costs.

Finally HP was awarded a major contract in the Uttar Pradesh government in India to supply 1.5 million laptops to students in the state. Now we clearly still face a long road ahead and there is a lot we still have to sit and rebuild. I don’t like the fact that we saw revenue decline in each of our major segments. We are focused on turning this around, that means innovating in our products improving our go to market, and implementing new business models. Restoring growth is a priority and we’re on it.

We’re seeing pockets of progress but as we said at the security analyst meeting, it will take the rest of the year to embed our plans before we see sustainable progress on the top line.

Let me talk a bit more about the personal systems business, it’s called personal systems for a reason. Personal computing is about much more than the personal computer. It’s not news to anyone if they are tectonic shift happening in this market as new form factors continue to proliferate, new operating platforms emerge and the lines between the enterprise and the consumers learn.

On top of that the pace of the shift is actually accelerating. There are a lot reasons why we are where are we in this market, but I truly believe that this is a business we need to be in for three reasons; first nobody understands computing like HP, from the data center to the device. Second the future is convergence. As the complexity of these computing ecosystems go up, our ability to bring pieces together become a competitive advantage. And third security, as these devices become more central to our business and our lives they present greater risk to both enterprises and individual. And HP understands how to balance access and security. By bringing these three things together, HP can win in this rapidly growing market by marrying form factor with computing power to create a secure personnel system to enterprises and consumers needs to drive their businesses and with their lives.

It is going to take us some time to get back on track, but they've made significant progress over the past year in our mobility strategy with new form factors that are resonating well with customers and multiple operating systems that are going to give us flexibility to meet a variety of customer needs.

At the same time we are continuing to innovate in key computing market where we already need like workstations, desktops and notebooks. Areas I believe will continue to be critical pieces of the computing ecosystem. As we navigate this transition we need to remain focused on the balance between profitability and market share but it is important to acknowledge that pricing continues to be very competitive. We planned to continue to take actions to improve our margins in personal system as we Go through Fiscal Year 2013.

In the Enterprise Group we are seeing a rapid market in e-mail and servers where we have a significantly lesser position and that continues to impact HP. We also saw start continued headwinds in BCF and the traditional storage business as they managed that portfolio transition. We have two distinct stories written about storage portfolio with our focus area of converged storage performing extremely well while we transition our way from our traditional storage product. As a result, we will now be breaking out converged storage from traditional storage to give investors a better visibility into what is happening in this business.

In servers we are focusing on improving our hyper scaled offering, the first quarter represented a tough comparison over the prior year for hyper scale business but it seems to be somewhat lumpy. But we still have work to do in this market to compete appropriately. In enterprise services, we have to reignite growth and there is plenty of work to do on improving our sales capability. Just last week, we announced Larry Stack as Senior Vice President of Global Sales for Enterprise services. He is passed with reigniting Enterprises sales. Larry is a seasoned leader who have had a strong track record of successfully transforming sales organizations at Accenture and actually with HP before that. I must say I have been pleased with the quality of talent that ES team has been able to attract over the past few quarters to help them in their turnaround.

In software, we saw weakness in our traditional IT performance suite business. We are working to improve our product offering, business model, and execution to address the drop in license revenue. And our autonomy business has began to stabilize, but it is still a work in process and will take time to get back on track. But overall, our turnaround made progress in the first quarter. If I had to characterize it, I say the patients showed some improvement and there are a number of new programs and disruptive innovation that should helps us along. Two, that I am particularly excited about are the focusing of HP Labs under Martin Fink and the launch of our first product resulting from Project Moonshot.

You will recall that during our security analysts meeting, I talked about the need to improve how HP commercializes the incredible innovation that is happening across the company and today we are rolling at a new vision for HP Labs that is going to take one of Silicon Valley’s most iconic entities to new levels.

Martin and the leadership team are refocusing labs place greater resources on priorities more closely aligned with the business group of future product roadmap particularly in the areas of cloud, security, and information optimization.

Innovation is the heart of this company and we expect this refocused HP Labs to bring revolutionary new products to markets that will change the way we manage, move and interact with information and how we understand the world around us. And later in the second quarter, we will bringing the latest innovation for HP Labs in our Enterprise group to market. The first, commercialize product from our Project Moonshot.

We expect this to truly revolutionize the economics of the data center with an entirely new category of server that consumes up to 89% less energy, 94% less phase, and 63% less costs that are traditional x86 server environment, this is exactly the technological inflection that can fuel the exponential growth of hyperscale computing.

To put that in perspective, it’s just 10 large web services providers switch their traditional x86 servers to Moonshot, they could say the combined $120 million in energy operating expense and nearly 1 million metric tons of CO2 per year, the equivalent of taking over 180,000 cars of the road for the year. That is a game changer.

Now let me turn to our fiscal second quarter and future outlook. HP’s performance in the first quarter was encouraging, but we are not going to get ahead of ourselves. As I have said before, we know where we are going and we have a plan to get there, now we have to focus on execution. Our Q2 outlook for non-GAAP earnings per share is $0.80 to $0.82 a share. Our outlook for fiscal 2013 is unchanged at $3.40 to $3.60 per share. I’m pleased with our performance in Q1 and I feel good about the rest of the year.

So now, let me turn it over to Cathie to highlight some of the key factors behind our outlook. Cathie?

Cathie Lesjak

Thanks, Meg. As you’ve heard, we continue to make the difficult yet necessary improvement to set HP up for long-term success. we are creating new products and services that matter to our customers. We are improving our sales performance in channel relationships and we are recalibrating the expense profile to align as a market and business dynamics we face.

At the highest level, I would characterize this quarter’s financial results as one constructive data point on the study, albeit not always linear progress we would speculate in our turnaround journey. Before I dig into the financial, let me explain some segment reporting changes that we have made this fiscal year.

Beginning with quarters we are reporting to new business segments; the enterprise group and enterprise services. The enterprise group mostly combines the previously reported enterprise server storage and networking segment using technology services business that was previously reported within the services segment. Enterprise services is largely the remaining pieces of the previously reported services segment, including infrastructure technology outsourcing and application and business services. You should note that there are other transfers to appropriately aligned all of the (inaudible) maintenance functionality is within appropriate product and services group and disclosed in detail in an 8K be published this morning.

In the filing we have reported fiscal 11 and fiscal 12 revenue and operating profit by segment under the new reporting structure to help you understand the historical performances of these businesses under that structure.

Now turning to the results, revenue was $28.4 billion down 6% year-over-year as reported and down 4% in constant currency from a global macroeconomic perspective a number of headwinds but we have seen pocket of progress on a regional basis. In America's revenue was $12.8 billion down 3% year-over-year as reported and in constant currency. And revenue in EMEA was $10.3 billion down 11% and 9% in constant currency. Revenue in Asia Pacific was $5.2 billion up 1% as reported and in constant currency.

The US served better than Latin America while EMEA continues to experience broad-based challenges with several major countries down double-digit percentages. Within A PJ both China and India had strong constant currency growth while the South Pacific still faces a tough economic conditions.

Non-GAAP gross margin of 22.3% was down 10 basis points year-over-year due to the tough pricing environment in our personal systems bucket as well as margin declines within EG and ES, these impacts were somewhat offset by margin expansion in printing through the rate improvements in hardware and internal as well as the favorable mix shift towards in supply. Sequential non-GAAP gross margin was down 190 basis points driven by seasonal revenue declines in enterprise services outpacing expense reductions and printing margin declined as the price mix shifted to toner.

Non-GAAP operating expenses were $4.1 billion, down 1.4% year-over-year, is down 1% sequentially. The restructuring program announced last May provided savings this quarter in line with our expectations and on the year-over-year basis some of these savings are helping to drive down our SG&A expenses. Sequentially R&D declined primarily due to two factors, first was the impact of value added tax subsidy credits in the current period, second was higher expense in Q4 ’12 resulting from one time accelerated contract costs. Despite the favorable impact of the current period of that credit R&D was up by year-over-year in both apples dollars and as a percentage of revenue.

Non-GAAP operating margin was 7.9% down 70 basis points year-over-year and the company delivered $2.2 billion in operating profits. Given the macro and specific business challenges we faced this quarter, the overall profit story came in better than we had anticipated and while we know we have more work to do, this is the step in the right direction. The bridge from non-GAAP operating profit to non-GAAP earnings per share includes the following. Other income and expense of $179 million in expense.

A tax rate of 22% production in our weighted average share count to 1 million 956 million shares and we use $253 million in Q1 to repurchase 19.2 million shares. As a result, we delivered non-GAAP diluted earnings per share of $.82 and a gap diluted earnings per share of $.53. The non-GAAP EPS exceeded the high end of our Outlook be provided at the last earnings call by $.11 of 15%.

First quarter fiscal 2013 non-GAAP diluted earnings per share excludes pretax charges of approximately $350 million from the amortization of purchased intangible assets, about $110 million of restructuring charges and a very small amount of acquisition related expense from prior acquisitions. Now on to the business segments performances for the quarter.

Systems delivered revenue of $8.2 billion in the quarter down 8% year-over-year with operating margin down 2.5 points to 2.7%. Operating profit of $223 million amount or to just 10% of HP's overall non-GAAP operating profit in the quarter. Total unit shipped was down 5% versus prior year driven largely by declines in notebooks, desktop units where a solidly this quarter. By categories, commercial revenue was down 4% and consumer revenue declined 15% year-over-year. Europe was a challenge that we continue to see positive traction in APJ met some of the channel improvements that describe selling good results.

Our effective inventory management positioned us well to capture a strong push ahead in of factors relative to the competition this quarter. While Windows 8 was not a significant enough catalyst, experienced the continued to be excited about our new product offerings placed into the market. That's clearly the margin of this business are still not where we want them to be and the top line pressures in particular with notebooks are significant. The business is facing a broader market downturn and we have a lot of work to do to this business back on track.

Turing to printing, net revenue was $5.9 billion, down 5% year-over-year. This is largely consistent with last quarter, we continue to realize share gains and high value ink hardware and a cost on multifunction portfolio and ink advantages doing well for us. Indigo also had another quarter. We think the new ink technology with innovated for the SMB community is a game changer and we are launching the Officejet Pro X admit strong customer interest for the product.

Operating profit was $1 billion or 16.1% of revenue, up 390 basis points year-over-year. Supply to 66% of the mix roughly flat year-over-year and we continue to manage our inventory down with dollar declines for the sixth quarter in a row in supply. Channel inventory is within a acceptable range, this represents great progress and is down more than 25% from the peak several quarters ago.

By business unit total (inaudible) unit shipment volume was down 11% year-over-year largely driven by the decline in lower end consumer, as we maintain focus on the higher value units. Consumer (inaudible) revenue was down 2% with hardware units down 13% year-over-year. Commercial (inaudible) revenue was down 9% and hardware units were down 6% versus the prior year period.

As I mentioned last quarter, the revenue declines are partly attributable through a shift in focus from lower entrepreneur to the high end category where we have seen success with market share gain. As a result of this shift and our ink advantage products our average selling prices have increased year-over-year in printing. We are managing unit placement investments to drive share holder value over the life of the unit.

Turning to the enterprise group, revenue of $7 billion was 4% year-over-year with declines across servers, storage and technology services. The greatest declines we’re experienced in EMEA again this quarter. Operating profit was $1.1 billion and the operating margin of 15.5% was 2.8 points below the prior year period, driven by operating margin declines in each of the business unit slightly offset by a favorable mix shift to technology services.

At the business unit levels, Industry Standard Servers revenue declined 3% year-over-year, we continue to see specific focus in EMEA, but there was solid growth in APJ particularly in China. In our hyperscale business, there was a tough comparison given a large deals in Q1 of 2012. As you know, hyperscale deals can be lumpy in nature.

The ramp of our Gen8 Proliant services continues to go well, and we’ve seen favorable trends in our average selling prices of these units too. Within storage, overall revenue declined 13% year-over-year to $833 million. There is a story within a story that is important, so we’ve added excellent level of granularity to our storage reported revenue this year.

We have talked in the past about the successes in our key focus area convert storage solutions, these products are driving the next wave of innovations and capturing the attention of customers. Our convert storage products grew 18% year-over-year while traditional storage revenue declined 21%. This traditional category includes tape, storage networking and our legacy external disk products such as EVA and XP.

As we’ve mentioned before, convert storage consists of products based on HP’s intellectual property such as 3PAR, Store 1, Store Virtual and Store O. The new 35 midrange offering we announced in December good year-over-year growth in convert storage and overall, 3PAR is continuing to drive year-over-year growth margin improvements in the storage business. Q1 was the fourth consecutive quarter where gross margins expanded. Business critical systems revenue declined 24% year-over-year driven by the continuing interminable pressures. This business now comprises 4% of segment revenue and is expected to continue to face growth challenges.

Phase 2 of the Oracle titanium trial is currently scheduled to begin in the second quarter. It is important that the trial pursuits the face two to address oracles rates of contract and the damages handle our government is a speed is entitled to receive.

Networking revenue was up 4% year-over-year at $608 million and up 6% for normalized divestitures in the Q1 of 2012. This business has seen sustained growth momentum and will take time. We continue to work on challenge engagement and says productivity and this is one of the few businesses where we so growth in EMEA. We are disrupting the market think the first vendor with the full software defined networking solution with the complete ecosystem offering. Technology services revenue was down 1% year-over-year to $2.2 billion. Again this business is now being reported in the enterprise segment because of its key relationship to the hardware businesses.

As we continue to align go to market capability and expand penetration rate across the (inaudible) services we expect this important business there is some of the best margins in XP will benefit. The new reporting segment enterprising segment delivered $5.9 million down 7% from the prior year. Operating profit was $76 million a 1.3% of revenue down one point from the prior year.

Some of the expected key account part of the debacle in Q1 as expected given customer decision to delay until later in the year. We have increased our management discipline in resource management and are making progress in improving the financial impact of our low performing accounts.

IT outsourcing revenue of $3.7 billion was down 6% year-over-year, driven by contractual revenue run off and pricing pressures. Application and business services revenue was down 9% versus the prior year at $2.2 billion and we saw signing pressure in the quarter. Some of the larger account run off impacted revenue here as well. However, we saw sequential double digit growth in our strategic enterprise services revenue such as cloud, security, application modernization and information management and we continue to attack the market opportunity in this space.

Software revenue of $926 million was down 2% from the prior year. License revenue growth was weak this quarter, down 16% year-over-year. Services revenue was down 8% and support revenue up 11% year-over-year. We continue to see growth in SaaS bookings and revenue. Overall, first quarter operating profit for software was $167 million or 17% of revenue.

To understand the software results, you need to appreciate the focus you are applying to create a healthier, more profitable business. For example, in professional services, we have moved away from unprofitable contracts and have also expanded the professional services eco system to our channel partners, improving our channel engagements while also expanding service facility for customers.

We are seeing broader market declines in our traditional IT performance fee business and we need to stem the decline in licenses by better aligning the organization from an end to end perspective, improving our sales productivity and shifting more of our business to SaaS.

We saw strong growth in both our security and our big data software offerings. We are excited about the healthy pipeline across security and big data and along with the economies, cloud and the IT performance suites these key strategic pillars are leading the integration of software with the broader HP portfolio. The integration can be seen in new product innovations across CTS, EG and ES.

HP financial services revenue was up 1% year-over-year at $957 million, financing volume was down 25% and net portfolio assets increased 1% year-over-year to $12.6 billion. Operating profit of $101 million was up 100 basis points to 10.6% of revenue. Now on to capital allocation and the balance sheet. Operating cash flow was $2.6 billion, up 115% year-over-year, and free cash flow was $2.1 billion up over 400%. Total gross cash at the end of the quarter, was $13.1 billion. This was a strong quarterly performance for us in what is normally a seasonally weaker cash flow quarter.

At our security analyst meeting in October a potential deposit of up to $400 million to the Indian Directorate of Revenue Intelligence relating to a legal dispute of our customs duty. The amount of that deposit has now been determined to be $34 million, $10 million of which was deposited in Q1. HP is required to deposit the additional $24 million in March.

We continue to manage working capital well in the quarter. The cash conversion cycle was 23 days down five days year-over-year, all of the improvement was in days sales outstanding and days of inventory. Our cash conversion cycle increased two days quarter-on-quarter in line with normal seasonality. During the quarter we returned $253 million in cash for shareholders via share repurchases leaving roughly $8.9 billion remaining in the authorized share repurchase program. We also take $258 million to shareholders through our quarterly dividend. Our net debt at the operating company level now stands at $4.7 billion. This position over $1.1 billion this quarter. Yet to be a seeing steady progress.

Now turning to our Outlook, as we have said before fiscal 13 is a fixed and rebuild year for SB. While we have seen positive signs in our business performances in Q1, through macro and market pressures that we continue to face and some of the headwinds we expect in Q1 as just been delayed until later this year as customers work through those complex transition. We still expect to run off with some major profitability in fact more likely to occur in the second half.

The investments we are making across IT systems supply chains new product innovation and clout are starting to bear fruit. But there are key challenges still out there. Frankly the business deterioration we are seeing in person systems particularly in EMEA and neck notebooks was worse than we expected. For Q2 we expect the rate of year-over-year decline between personal systems to increase from Q1 especially given that in Q2 of 2012 we are benefiting from the rebound after hard disk drive shortage the previous quarter. Our server business has a particularly strong market position in EMEA and the economic backdrop of that environment is still visible.

The titanium challenges within BC of are still with us. Within storage we are getting close to the point where the converged storage group will outpace the declines on the other external this product. And networking should continuing to deliver as it has been.

We expect the currency will be a headwind two revenue of approximately 1 year-over-year in Q2. With that context we continue to expect full year fiscal year 2013 we expect non-GAAP earnings per share in the range of $.80-$.82. From a GAAP perspective we expect the full year GAAP earnings per share to be in the range of $2.30 to $2.50. And GAAP earnings per share for fiscal Q2 is expected to be in the range of $0.38 to $0.40.

With that let us open it up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) our first question comes from (inaudible). of Goldman Sachs please go ahead.

Unidentified Analyst

The has been an increase in gross and speculation regarding the potential benefits of a breakup or a more significant restructuring of the company. Can you review how we think about the long-term benefit related to the edge these constructs are and are you still committed to turning around HP while we're keeping the core divisions together.

Unidentified Company Representative

So we have no plans to break of the company and I said many times I feel very strongly that we are better and stronger together. SP over the last 10 years I think have put together being most valuable franchise in IT, particularly as we look forward to the more significant for could change in a height the is bought, paid for, consumed, how application is written the made to a child, we have a terrific set of assets and we are going to drive that to I think really great business performance. I mean over time the business performance have two undisclosed value of better together. And when you think about our brand, our scale, our distribution, our go to market collaboration on R&D and supply chain, I think we've got a great set of assets and importantly customers want this company to be together and we heard that loud and clear in August 18 of 2011. So we really feel strongly that this is better together.

Unidentified Company Representative

Great. Thanks, Bill. Next question please.

Operator

Our next question comes from Kathryn Huberty of Morgan Stanley. Please go ahead.

Kathryn Huberty – Morgan Stanley

Thanks. Good afternoon. The better first quarter results and better than expected second quarter guidance suggest that earnings in the back half of the year will come down, so just curious what has changed in our mind, you mentioned greater PC weakness back loaded impact in the run off of services deals, what else makes you more cautious on the back half of the year?

Unidentified Company Representative

Katy, I think you have captured the main reasons for the comments about the back half. I mean it really is about the fact that ES didn’t have the run off that we had expected in the first quarter and that has pushed out. It’s also true that I would say in the first quarter, the signings in ES were not quite where we wanted them to be or expected them to be and as you know signings earlier in the year mean revenue later in the year and if the signings has come in later in the year, that means revenue for 2014. So that’s a little bit of a challenge that we have got to overcome and that’s about making the right investments and they are looking at putting that in place, it’s about getting the right sales leader in place. We have got Larry Stack who have joined us and so I think there is some cautious optimism there, but the first quarter signings were a little bit weaker than we saw it.

Personal systems business, the market was weaker than we had expected and then we really saw that in EMEA and across Notebook and so we are really not expecting that the market improve in fiscal 2013 at this point. And as I mentioned in my prepared remarks, we do expect the personal systems revenue will decline year-over-year at a faster rate than it did in the first quarter. We’re going to have to watch that very carefully. and then finally, we did delay from enabling investments and I would say that was probably due to our cautious nature of wanting to see the savings before we go and make some of these investments and now, we’re starting to ramp some of those investments that we had decided to delay. And those are investments mostly in enabling savings over the long-term, things like some of the IT staff, some of the side consolidation in the real estate area. And so we’re basically laying those out going forward.

Kathryn Huberty – Morgan Stanley

Thank you.

Rob Binns

Great, thanks Cathie. Next question please.

Operator

Our next question comes from Toni Sacconaghi of Sanford Bernstein. Please go ahead.

Toni Sacconaghi, Jr. – Sanford C. Bernstein & Co., LLC

Yes, thank you. I’m wondering if you can update us where you are in your cost savings initiatives, I think you had outlined previously that you expected labor savings to amount about $2.2 billion in gross savings and non-labor savings to be about half of that amount. So a total of $3.3 billion, can you tell us and I realize there’s some reinvestment there, but can you tell us on a growth basis, what you think you captured on a run rate basis in fiscal Q1 and where you think you are in that process?

Meg Whitman

Yeah, Toni. This is Meg, let me give you sort of high level comment on this. And then I’ll let Cathie to do more detail. I mean this restructuring program is an incredibly important part of our strategy, because we have to create the financial capacity to invest and then to grow. And I would say the restructuring program remains very much on track, our further 3,500 people left the Company in Q1 of this year and the FY ‘12 headcount reduction was 11,800. So we’ve now at 16,300 people who lead the Company and while that is a very tough thing to do, we can actually see savings from that and we can actually see a more streamlined and focused organization, and we expect the savings to ramp through the remainder of 13 and then into 14 and this is the financial capacity that we are going to need to hit our numbers and also create financial capacity to invest.

Unidentified Company Representative

I think the only thing that I would add is on the labor savings, the bulk of those savings are really coming in the second half of the year, in fact in some cases we needed to make enabling investment early in the year, in order to realize them and we believe that we are still on tract to make those savings.

Unidentified Company Representative

Great thanks Tony. Next question please.

Operator

Our next question comes from Ben Reitzes of Barclays. Please go ahead.

Benjamin Reitzes – Barclays Capital

Yes, thanks a lot. Meg and Cathie I understand why you want to keep the guidance for EPS because PC is getting worse in the Europe uncertainty, but why not raise the free cash flow target of $5 billion given the first quarter was better expected on the free cash flow front and what are the puts and takes there of that number. What are the chances that could be actually $6 billion or higher and as goes throughout the year.

Unidentified Company Representative

Thanks Ben. So I’m glad you pointed out that operating cash flow, we are very pleased with the progress that we made with respect to operating cash flow, up 115% year-over-year and then the other key piece is that we really got the discipline around capital expenditures and that enabled us to grow our free cash flow over 400% year-over-year to $2.1 billion, now we don’t typically update our cash flow outlook mid year, and so I’m not gong to update, but I think the best way to think about the first quarter, was it a very big deposit on the year. And there is also the fact that the DRI deposits that we had originally expected could be up to $400 million, came in like to and I think this also gives us a bit of the tailing.

Unidentified Company Representative

Great, thanks very much then. Next question please.

Operator

Our next question comes from (inaudible). Please go ahead.

Unidentified Analyst

Thank you very much. I was curious how you're going to be judging the success of the office jet Pro platform, sort of what with the should be looked at and how should we think of the potential margin contribution and then also how are you thinking about this launch these of this is aligned which you obviously get from Canon. Thank you.

Unidentified Company Representative

We are excited about the office jet Pro and I'm sure we could you read that got it perfectly view from the industry trade magazine, as well as customers who had some early units. And this is an exciting opportunity because basically what this does is allow into small to medium-sized room even do some pretty big businesses because effectively the same speed as laser at half the cost. So this is the kind of disruptive innovation that we do at which we have this is has been worked on for number of years in tissue. This page wide array technology is breakthrough.

And we're going to drive it as far as we can and we're going to my question also by the number of units installed over the next 12 months and bought kind of customer adopted. And with regard to deserve this and they've got a great laser, but to the extent that cannibalization that's the natural order of things and I've said for many years when there's disruptive technology innovation in the business better to do it to ourselves than how someone do it to us and of course Inc. is margin accretive to us because we obviously on all of that IP.

Unidentified Company Representative

I think the only thing outside and is taking back to the security analyst I mean we believe that even with our Inc. in the office product, does bit on the low end of the day said that we still have an opportunity to grow the laser business from a revenue perspective and to take share. So I think for us, it’s not one or the other. We are basically executing in both business domains.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Great. Thanks, Shannon. Next question please.

Operator

Our next question comes from Brian Alexander of Raymond James. Please go ahead.

Brian Alexander – Raymond James & Associates

Thanks. Just on the personal systems business, I think your original outlook for the year assumed flat profits. We just saw revenue down 8%, profit down 50% obviously it’s a tough market. But (inaudible) staying in the business and you sound pretty excited about the new products that you are launching, so how are you thinking about the financial profile of this business going forward given your comments about balancing growth and profitability and given where margins are versus where they have been historically?

Unidentified Company Representative

So we are committed to this business. And as I said we are going to compete on differentiation, whether that is form factors, increased focus on mobility, a multi OS strategy, multi chip strategy, frankly relevant to various industries, we have got great response to our ElitePad 900 that can be customized by industry and then services.

So the way we have got to handle this is that we have to reallocate resources from the core PC business to mobile to other OS and to services. So while we have to make some investments, it can be incremental investments, it’s got to be moving resources from one part of the business to the other and we have got to continue to focus on operational excellence and we have made progress there whether its fee reductions, platform reductions, supply chain, quality and this by the way has actually been pretty helpful in terms of when we have combined our operating business with our PC business as we have been able to leverage notes, logistics, transportation.

So I think listen we anticipate the pricing is going to be problematic and quite competitive in the next set of time here, but we think we can manage that. and I think we see quite clearly what this is going to look like.

Cathie Lesjak

Let me also that if you look at the year-over-year operating margin declines, that was really driven by currency, so weak demand environment is combined with aggressive pricing and as we look out over the rest of the year, our expectation is the weak demand environment in the aggressive pricing stays with us. So it’s really facing a tough and shrinking PC market, broad softness in the PC market, but especially in notebooks in EMEA, and it’s more challenging that we had expected. So we do expect now that on a year-over-year basis, margins will erode. So a little bit different expectation than what we said at the security analyst meeting, we expect weak consumer demand and aggressive price competition to remain a headwind throughout the most of ‘13. and then finally, I think it’s really important to understand the impact or lack of impact this business can have on HP’s P&L, just to remind you that the $223 million of operating profit from PSG is just 10% of the Company’s operating profit.

Brian Alexander – Raymond James & Associates

Okay, thank you.

Rob Binns

Great, thanks, Brian. Next question, please.

Operator

Our next question comes from Keith Bachman of Bank of Montreal. Please go ahead.

Keith Bachman – BMO Capital Markets

Hi, thank you. I’d like to ask about the enterprise system’s profitability please. The profit matters either, even I’m going to new reporting format have been down for nine straight orders. Why do those margins stabilize or if you can give us some update on why the business may stabilize in terms of the margin profile and particularly address if you can where you think actually start to stabilize or improve? Thank you.

Meg Whitman

Yeah. So there’s a number of different factors going on in EG volume, and the negative ones

Keith Bachman – BMO Capital Markets

Hey I am (inaudible)

Unidentified Company Representative

Oh (inaudible) sorry about that. The negative factor that causes continued decline of BCS, It was a big and profitable business, we saw it decline by 24% year-over-year traditional storage is declining, EMEA we have an over developed share – not over developed but a very robust share in EMEA and when that market is weak it just proportionally affects (inaudible) but the good news we are – got, I think the best product line up we had in a long time here and we are making investments behind that product line up that warranty is the life blood of this business and as we migrate from traditional storage to converged storage, as we continue to gain share and networking and FDM as cloud system continues to lead the way in terms of private cloud.

We have nearly a 1000 private clouds up now in installation and as we continue to focus excellence and operations and TS attach, I think over time we see those margins start to turn but we have to make the necessary investments because this business is now a big (inaudible) it’s a big strategy going forward for us so we want to make sure that the ground work for profitable growth in 2014.

Keith Bachman – BMO Capital Markets

Okay just to (inaudible) hold to these levels for the next couple of quarters? Do you think there is more down turn?

Unidentified Company Representative

I don’t – we’re not really calling for more down side we definitely need to get the growth areas of this business storage – an sorry networking and storage growing again and that’s clearly the converge storage solutions growing 18% year-over-year those need to grow faster than the declines in the traditional and we’re getting close to the point where those will cross over and that’s going to help us on the storage side.

Networking did very well this quarter, we expected to gain share it was up 4% year-over-year when you normalize for the divestiture that we did a year ago, it’s up 6%, so we are very pleased with the networking performance and believe that this for enterprise group it’s going to be all about differentiation, we are not conceding commoditization anywhere, we are investing to differentiate kind of value proposition for our customers, and that’s moon shot software defined networking that’s the mid range, free product combined with some autonomy software, I mean there are just some real opportunities here, for a differentiated experience.

Unidentified Company Representative

Can I say one last thing you to a big chunk our go to market is with the channel.

Unidentified Analyst

Right.

Unidentified Company Representative

And we have made a big investment in writing the relationship that EG has with the channel, and we just came back from our global partner conference in Las Vegas and I can tell you first hand we are making really good progress here, so if revenue grows obviously we leverage the fixed costs that business that will have margin.

Unidentified Analyst

Okay thanks (inaudible).

Unidentified Company Representative

Thanks (inaudible), next question please.

Operator

Our next question comes from Mark Moskowitz of JPMorgan. Please go ahead.

Mark Moskowitz – JPMorgan

Yes thanks good afternoon, Meg or Cathie clearly it’s still early but your net debt positions improving nicely free cash flow you’ve talked about earlier had a really big improvement, I just want to get a sense in terms of an update, in terms of how you’re thinking about either investment internally from an R&D perspective and or may be in renewed appetite for an bolt on acquisition, is that acquisition strategy change in light of your improving business model?

Unidentified Company Representative

I think our 2013 our capital allocation strategy isn’t going to change, we are still focused on rebuilding the balance sheet offsetting dilution, maintaining our dividend policy and really focused on fixing what we have, the leverage and fixing and rebuilding the assets this company has put together over the last 10 years is simply enormous. Now you never say never, maybe there is a tuck in acquisition that we obviously have to have to further converge cloud, but it’s not on the plans. And then with regards to R&D, we got a plan for R&D, one of the things we have to stop doing at HP is increasing R&D and then pulling it back, so we’ve got an R&D plan. We are sticking to it. And the initiatives are pretty well laid out for the next 12 months.

Unidentified Company Representative

Great. Thanks. Next question please.

Operator

Our next question comes from Brian Marshal of the ISI Group. Please go ahead.

Unidentified Analyst

Great. Thanks guys. Question with respect to (inaudible) obviously it’s a real key component to increasing the company’s competitiveness going forward and it’s only 2% year-over-year, what’s your best performing major segment. But if you dug a little deeper and just make the simply assumption that autonomy perhaps was down 25% from where you guys acquired it. That would imply that your core software business is probably running something like single digit, mid single digit growth year-over-year and that’s a pretty deceleration from where we’re seeing recently. So I guess the question is do you think that deceleration of growth is going to continue in your core software business and if not why should we anticipate that turnaround?

Cathie Lesjak

Yeah, thanks Brian. So our software business, the bright spot there as I mentioned in my prepared remarks, (inaudible) and security. These are very robust businesses, we’ve got a great pipe and things are going very well. As (inaudible) our license revenue was not where we wanted it to be and my belief is that that’s a couple of things. One is execution, two is sales leadership and three is some changes that we need to make to the product. So I think we will actually turn that revenue trajectory around as we go through 2013 and enter into 2014. But we’ve got some basic blocking and tackling work that needs to be done in that part of the business.

Unidentified Analyst

Thanks. Great, thanks (inaudible). We’ve got time for couple of questions, we’ll run just a little long to squeeze a couple more in. So next question please?

Operator

Thank you. Our next question comes from Steven Milunovich of UBS. Please go ahead.

Steven Milunovich – UBS Securities

Great, thank you. Cathie, you mentioned a bit about the inventory situation with printer supplies, could you talk about PCs and any other products that you track in terms of weeks of inventory?

Cathie Lesjak

Sure. So overall, our channel inventory across EG printers and PCs, we’re all within acceptable ranges, I mean we feel very comfortable with where we ended channel inventories, specifically with respect to PCs overall, is good, I would say that on the consumer side, despite the fact that we gained share in consumer, we ended channel inventory a bit higher than we would like. So we are clearly focused on bringing that down a bit in Q2, but I think the real start here is the channel inventory performance in IPG. We have been dogged by ink supplies channel inventory being higher than we would like now for several quarters and it is now well within the range, I think it’s something like from the peak, something like 27% down year-over-year. So it’s just I’d say 20% to 7% down since the peak. so I think that that’s really strong, we’ve had dollar declines over the last six quarters, so it’s all in good shape at this point.

Meg Whitman

And I would just add, this is Meg, one of the things we have asked the business groups to do is to limit the discounting to get product into the channel, because in the end, we have to discount to get the products out. And so we have turned our sales force compensation to sell through as opposed to sell in and this is healthier for us, it’s better for the channel and I think it’s put us in a much better position, it also allows us to continue to differentiate our (inaudible) product by substituting what we call contra revenue or discounts to marketing where we can actually differentiate our products as supposed to sort of be on the road to commoditization, but I think we were on about 18 months ago. And frankly that’s helping to drive some of the average selling price increases across PCs and printers.

Steven Milunovich – UBS Securities

Great. Thanks, Steve. Next question please.

Operator

Your next question comes from Amit Daryanani of RBC Capital Markets. Please go ahead.

Amit Daryanani – RBC Capital Markets

Thanks a lot guys. Just a question on the Enterprise side and one on the storage sector. Could you may be just talk about when you look at the convergence storage revenues up 18% year-over-year how much do you think was from cannibalization of kind of the legacy EVA solutions if you may versus the new customer acquisitions, I don’t know if you can break that down, but that will be helpful.

And then just on Moonshot as well, when do you start to see that becoming the material contributor to the ISS revenue stream, that’s about it. Thank you.

Unidentified Company Representative

Great. On the converged storage, we have put a real emphasis on converged storage. We want to sell the new stocks, the (inaudible) disruptive in the marketplace. So our sales executives are all about 3PAR high-tier, mid-tier, StoreOnce what used to be call left hand network and high brick. So I don’t know how much is cannibalization versus the real focus, because my belief is sales teams can sell only so many things and we have told them we really want to be in the product that is disruptive.

Moonshot grows through the year. We are just taking our first orders now for the first space of Moonshot and we are excited about it, because of the characteristics of that technology and you might not be surprised to know that our first Moonshot order came from Japan and the reason of course is that they lost the big chunk of their grid in the Tsunami and so space, energy savings, and compute value at cost levels that are unprecedented. We are excited about that are unprecedented we are excited about that, so it will build through the year, but frankly it won’t hit it real, I think sort of full potential to 2014.

Amit Daryanani – RBC Capital Markets

Perfect, thank you.

Unidentified Company Representative

Thanks Amit. I think we probably got time for one last question.

Operator

Thank you, our final question comes from Kulbinder Garcha of Credit Suisse. Please go ahead.

Kulbinder Garcha – Credit Suisse

Last question from Meg and Cathie just going back to free cash flow, I understand you don’t obtain this years guidance, given the improvement you would expect in free cash flow for the year, it looks like you’re going to paydown most of your debt, probably inside of 12 months, is that the case in HP or in the situation you’re generating $6 billion, $7 billion of free cash flow year, can you remind us how committed you are to increase in dividend (inaudible), thanks.

Unidentified Company Representative

So I think you are right, I think we have made deposit on bringing our net debt at the operating company levels down to zero, so I would expect that while originally we thought it might take us until the end of ’14, that it probably won’t take us quite that long. And then you will be back in looking at our capital allocation priorities that we laid out how we think about capital at the security analyst meeting. And then its really about what kinds of returns do we get or what different types of investments and basically going to the highest and best returns.

We do, we are committed to returning cash to shareholders and we do think that take the form of those share repurchases and dividends, kind of our view around dividends is that over the long term, as our operating results scale, our payout ratio should probably scale as well obviously, we stay in tough with our board to ultimately that their decision and but we are aligned and working with them to determine kind of what will be the right set the right mix of returning cash to shareholders over the long term.

Unidentified Company Representative

Good, I think that’s the last time we have to last quarter, I thought I may just make a couple of closing remarks, if I can leave you with three thoughts; first is the turnaround is on track and we did better than we expected that we would. And so I think that’s a good sign and I said it in my prepared remarks, the patients showed some signs of improvement and I think we should be encouraged buyback, but we have three more quarters to go in this year. we feel very confident about delivering the full-year, but we have to deliver and we have to continue to execute as a marketization. So thank you very much. I think we’ll end the call now.

Rob Binns

Yeah. Thanks very much. That concludes the call. Thank you everybody.

Operator

Ladies and gentlemen, this concludes our call for today. Thank you.

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