HP Settles Patent Litigation with Gateway

Business Wire, March 1, 2006

PALO ALTO, Calif. -- HP (NYSE:HPQ)(Nasdaq:HPQ) today announced it has entered into a binding term sheet with Gateway, Inc. (and Gateway subsidiaries eMachines, Inc. and AD Technologies LLC) to settle all ongoing patent litigation relating to the companies' respective PC patents.

Under the binding term sheet, Gateway will pay HP $47 million, $25 million to be paid within seven business days following the execution of a definitive settlement agreement and cross-license agreement, and $22 million to be paid not later than one year after that date. The parties also will enter into a limited patent cross-license agreement.

The settlement agreement will resolve all claims asserted in three federal court lawsuits, three International Trade Commission investigations and a state court lawsuit against eMachines stemming from its earlier license agreement with HP.

HP initiated lawsuits against Gateway and eMachines in 2004 and 2005, claiming infringement of 27 of HP's patents. In counterclaims or independent actions, Gateway and AD Technologies asserted 13 patents against HP. As a result of the settlement agreement, each action will be dismissed.

"HP has a long history of innovation in PC technology, and we will continue to protect our investment in our PC patent portfolio," said Joe Beyers, vice president, Intellectual Property Licensing, HP.

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HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Jan. 31, 2006, HP revenue totaled $87.9 billion. More information about HP is available at www.hp.com.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, the results of HP and its consolidated subsidiaries may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements relating to payments expected to be received in connection with the settlement of pending litigation; the rights and releases to be obtained or granted in connection with the settlement of pending litigation; the expected results of the settlement of pending litigation; the timing of the anticipated disposition of pending litigation; other statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the performance of third parties of their obligations under the terms of the settlement of pending litigation, actions by courts and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2005. HP assumes no obligation and does not intend to update these forward-looking statements.

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