HP 2015 Annual Report Download - page 33

Table of Contents
The allocation of intellectual property rights between Hewlett Packard Enterprise Company ("Hewlett Packard Enterprise") and HP Inc. as part of the
Separation, and the shared use of certain intellectual property rights following the Separation, could adversely impact our reputation, our ability to
enforce certain intellectual property rights that are important to us and our competitive position.
In connection with the Separation, Hewlett-Packard Company allocated to each of Hewlett Packard Enterprise and HP Inc. the intellectual property assets
relevant to their businesses. The terms of the Separation include cross-licenses and other arrangements to provide for certain ongoing use of intellectual
property in the existing operations of both businesses. For example, through a joint brand holding structure, both Hewlett Packard Enterprise and HP Inc. will
retain the ability to make ongoing use of certain variations of the legacy Hewlett-Packard and HP branding, respectively. There is a risk that the joint brand
holding structure may impair the enforcement of HP Inc.'s trademark rights against third parties that infringe them. Furthermore, as a result of this shared use
of the legacy branding there is a risk that conduct or events adversely affecting the reputation of Hewlett Packard Enterprise could also adversely affect the
reputation of HP Inc. In addition, as a result of the allocation of intellectual property as part of the Separation, HP Inc. will no longer have ownership of
intellectual property allocated to Hewlett Packard Enterprise and our resulting intellectual property ownership position could adversely affect our position
and options relating to patent enforcement, patent licensing and cross-licensing, our ability to sell our products or services, our competitive position in the
industry and our ability to enter new product markets.
Our business and financial performance could suffer if we do not manage the risks associated with our services business properly.
The risks that accompany our services business differ from those of our other businesses and include the following:
•The success of our services business is to a significant degree dependent on our ability to retain our significant services clients and maintain or
increase the level of revenues from these clients. We may lose clients due to their merger or acquisition, business failure, contract expiration or
their selection of a competing service provider or decision to in-source services. In addition, we may not be able to retain or renew
relationships with our significant clients. As a result of business downturns or for other business reasons, we are also vulnerable to reduced
business from our clients, which can reduce the scope of services provided and the prices for those services. We may not be able to replace the
revenue and earnings from any such lost clients or reductions in services. In addition, our contracts may allow a client to terminate the contract
for convenience, and we may not be able to fully recover our investments in such circumstances.
•The pricing and other terms of some of our service agreements require us to make estimates and assumptions at the time we enter into these
contracts that could differ from actual results. Any increased or unexpected costs or unanticipated delays in connection with the performance
of these engagements, including delays caused by factors outside our control, could make these agreements less profitable or unprofitable,
which could have an adverse effect on the profit margin of our services business.
•Some of our service agreements require significant investment in the early stages that is expected to be recovered through billings over the life
of the agreement. These agreements may involve the development and deployment of new technologies. Varying degrees of performance risk
exist in each agreement with these characteristics, and some or all elements of service delivery under these agreements are dependent upon
successful completion of the development and deployment phases. Any failure to perform satisfactorily under these agreements may expose us
to legal liability, result in the loss of customers and harm our reputation, which could harm the financial performance of our services business.
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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