1 00:00:02,520 --> 00:00:07,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,480 --> 00:00:11,280 Speaker 2: HPE says tariffs will have a smaller than expected impact 3 00:00:11,600 --> 00:00:14,840 Speaker 2: on sales this year. AI revenue also beat and assessimates, 4 00:00:15,120 --> 00:00:17,920 Speaker 2: but the company continues to face headwinds, and that includes 5 00:00:18,120 --> 00:00:22,440 Speaker 2: an activist investor. HPE CEO Anthony and Ery joins us, Now, 6 00:00:22,920 --> 00:00:25,919 Speaker 2: I find what you said about tariffs and how that's 7 00:00:25,960 --> 00:00:31,320 Speaker 2: reflected in the numbers so interesting because the Hyperscalers, for example, 8 00:00:31,840 --> 00:00:35,320 Speaker 2: told us that one reason capital expenditures were raised in 9 00:00:35,360 --> 00:00:38,640 Speaker 2: that period is the reflection of the higher cost of 10 00:00:38,680 --> 00:00:42,040 Speaker 2: doing business because of tariffs. For you, it's like almost 11 00:00:42,080 --> 00:00:43,120 Speaker 2: the opposite story. 12 00:00:45,080 --> 00:00:49,480 Speaker 3: Yeah, good morning, Ed, thanks for having me. Look, we'll 13 00:00:49,520 --> 00:00:52,320 Speaker 3: raise our guide thence for a number of factors. Number one, 14 00:00:52,800 --> 00:00:56,080 Speaker 3: because of all the war we have done throughout a 15 00:00:56,320 --> 00:00:59,560 Speaker 3: very diversified supply chain, we find ways to admit together 16 00:00:59,560 --> 00:01:04,280 Speaker 3: the TARA Obviously the USMCA plays a role in that. 17 00:01:05,319 --> 00:01:07,760 Speaker 3: But at the same time, we know we are performing 18 00:01:07,840 --> 00:01:11,039 Speaker 3: better in many of our businesses and we have had 19 00:01:11,160 --> 00:01:14,920 Speaker 3: a number of targeted actions to continue to mitigate any 20 00:01:14,920 --> 00:01:17,480 Speaker 3: impact from the tariff. And that's US today as we 21 00:01:17,640 --> 00:01:20,960 Speaker 3: know it. But the reality is that the original impact 22 00:01:21,000 --> 00:01:24,319 Speaker 3: we communicated at the earnest call in Q one now 23 00:01:24,360 --> 00:01:28,360 Speaker 3: is significant lesser and therefore, together with the cost actions, 24 00:01:28,480 --> 00:01:31,360 Speaker 3: together with the better performance of the business and the 25 00:01:31,440 --> 00:01:34,360 Speaker 3: lesser impact on tariff, will raise the bottom range of 26 00:01:34,400 --> 00:01:36,319 Speaker 3: our guide by eight cents. 27 00:01:37,720 --> 00:01:40,840 Speaker 2: Antonia, is it possible for you to quantify for us 28 00:01:41,440 --> 00:01:44,959 Speaker 2: the sort of sales channel impact that you provide from video? 29 00:01:45,360 --> 00:01:48,200 Speaker 2: So we talk endlessly about all of the projects domestic 30 00:01:48,280 --> 00:01:51,440 Speaker 2: and overseas, and videos involved in the great build out. 31 00:01:51,720 --> 00:01:54,440 Speaker 2: But as you know so well, and I spend hours 32 00:01:54,520 --> 00:01:59,560 Speaker 2: tearing servers apart, nothing happens without HPE and others assembling 33 00:01:59,640 --> 00:02:02,480 Speaker 2: the desigre. I just want a number on it, that's 34 00:02:02,520 --> 00:02:02,880 Speaker 2: the thing. 35 00:02:04,160 --> 00:02:08,079 Speaker 3: Yeah, Well, hard to put a number because you know, 36 00:02:08,240 --> 00:02:11,880 Speaker 3: many of these buildouts are happening as we speak, and 37 00:02:11,919 --> 00:02:14,720 Speaker 3: it takes a little bit of time to go from 38 00:02:14,800 --> 00:02:17,960 Speaker 3: a you know, an agreement with a customer working with 39 00:02:18,120 --> 00:02:21,520 Speaker 3: US and Nvidia, to building a deploying it and then 40 00:02:21,800 --> 00:02:25,680 Speaker 3: eventually putting in production. But I can tell you, look, 41 00:02:25,840 --> 00:02:29,400 Speaker 3: we are have a deep, long standing relationship with Nvidia. 42 00:02:29,800 --> 00:02:32,560 Speaker 3: We are covering all segments of the market where it's 43 00:02:32,639 --> 00:02:36,840 Speaker 3: these big, large buildouts in the service provider space. Whether 44 00:02:36,880 --> 00:02:39,679 Speaker 3: it's sovereign or enterprise. And one of the things I'm 45 00:02:39,760 --> 00:02:42,000 Speaker 3: really proud is that the work we put together with 46 00:02:42,120 --> 00:02:45,800 Speaker 3: Nvidia last last year when we announced the Nvidia competing 47 00:02:45,840 --> 00:02:49,400 Speaker 3: by HP and a private cloud, AI is growing very rapidly. 48 00:02:49,480 --> 00:02:52,919 Speaker 3: In fact, one third of the net new orders we 49 00:02:53,040 --> 00:02:56,960 Speaker 3: poked Q in Q two we're from enterprise. But at 50 00:02:56,960 --> 00:02:59,519 Speaker 3: the same time we are completing one of the largest 51 00:02:59,560 --> 00:03:03,520 Speaker 3: deployed MENS on the GB two hundred as we speak, 52 00:03:03,720 --> 00:03:07,280 Speaker 3: and that's a very large deployment. And then we said 53 00:03:07,360 --> 00:03:10,799 Speaker 3: that our backlog grew quarter over quarter now is three 54 00:03:10,800 --> 00:03:14,520 Speaker 3: point two billion dollars on a commulative basis. For the 55 00:03:14,600 --> 00:03:17,680 Speaker 3: last two years, we book over nine billion dollars and 56 00:03:17,720 --> 00:03:21,960 Speaker 3: we have a multiples of the backlog in our pipeline. 57 00:03:22,440 --> 00:03:25,840 Speaker 1: That one billion you attributed to AI in particular is good, 58 00:03:26,560 --> 00:03:28,320 Speaker 1: but it's not as much as Dell, for example. I 59 00:03:28,320 --> 00:03:30,399 Speaker 1: hate to put it so on the nose in that way, Antonio, 60 00:03:30,440 --> 00:03:33,359 Speaker 1: but how much is perhaps Elliott on your board or 61 00:03:33,400 --> 00:03:37,360 Speaker 1: others around you sort of saying, look, capitalize on AI 62 00:03:37,400 --> 00:03:38,000 Speaker 1: even more. 63 00:03:39,360 --> 00:03:42,680 Speaker 3: Yeah, now there has nothing to do. Look the previous 64 00:03:42,760 --> 00:03:45,800 Speaker 3: quarter that we book ourselves a very large order, which 65 00:03:45,840 --> 00:03:48,520 Speaker 3: is the one we are deploying today and that was 66 00:03:48,640 --> 00:03:50,920 Speaker 3: not the all didn't do that. So this is a 67 00:03:51,000 --> 00:03:54,400 Speaker 3: lumping business and you will see us also talking about 68 00:03:54,400 --> 00:03:56,440 Speaker 3: some of the large order as we may get in 69 00:03:56,480 --> 00:04:01,320 Speaker 3: the current quarter of subsequent quarter. So you know this 70 00:04:01,520 --> 00:04:04,120 Speaker 3: goes back and forth. But ultimately you have to play 71 00:04:04,120 --> 00:04:08,120 Speaker 3: with discipline and our goal is to grow in the 72 00:04:08,240 --> 00:04:11,200 Speaker 3: eye and the rest of the business with a capital 73 00:04:11,280 --> 00:04:14,560 Speaker 3: structure that works because the reality is that there is 74 00:04:14,680 --> 00:04:18,160 Speaker 3: revenue growth, then there is profit accretion, and then is 75 00:04:18,240 --> 00:04:21,400 Speaker 3: working capital. And our working capital is something you have 76 00:04:21,440 --> 00:04:26,200 Speaker 3: to work very very closely because the timing from winning 77 00:04:26,279 --> 00:04:29,039 Speaker 3: a deal to the time of revenue recognition in these 78 00:04:29,120 --> 00:04:32,240 Speaker 3: large deals can be long and therefore you impact cash 79 00:04:32,240 --> 00:04:34,560 Speaker 3: flow from operation. So we're trying to balance all of 80 00:04:34,600 --> 00:04:37,560 Speaker 3: that while we deliver on our commitments both on the 81 00:04:37,600 --> 00:04:39,560 Speaker 3: revenue growth and on the EPs growth. 82 00:04:40,560 --> 00:04:43,360 Speaker 1: Well, you delivered in terms of six percent revenue growth 83 00:04:43,360 --> 00:04:46,880 Speaker 1: on the court. We appreciate it Antonio andry Hpeco for 84 00:04:46,960 --> 00:04:47,520 Speaker 1: joining us.