Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: HPE says tariffs will have a smaller than expected impact
Speaker 2: on sales this year. AI revenue also beat and assessimates,
Speaker 2: but the company continues to face headwinds, and that includes
Speaker 2: an activist investor. HPE CEO Anthony and Ery joins us, Now,
Speaker 2: I find what you said about tariffs and how that's
Speaker 2: reflected in the numbers so interesting because the Hyperscalers, for example,
Speaker 2: told us that one reason capital expenditures were raised in
Speaker 2: that period is the reflection of the higher cost of
Speaker 2: doing business because of tariffs. For you, it's like almost
Speaker 2: the opposite story.
Speaker 3: Yeah, good morning, Ed, thanks for having me. Look, we'll
Speaker 3: raise our guide thence for a number of factors. Number one,
Speaker 3: because of all the war we have done throughout a
Speaker 3: very diversified supply chain, we find ways to admit together
Speaker 3: the TARA Obviously the USMCA plays a role in that.
Speaker 3: But at the same time, we know we are performing
Speaker 3: better in many of our businesses and we have had
Speaker 3: a number of targeted actions to continue to mitigate any
Speaker 3: impact from the tariff. And that's US today as we
Speaker 3: know it. But the reality is that the original impact
Speaker 3: we communicated at the earnest call in Q one now
Speaker 3: is significant lesser and therefore, together with the cost actions,
Speaker 3: together with the better performance of the business and the
Speaker 3: lesser impact on tariff, will raise the bottom range of
Speaker 3: our guide by eight cents.
Speaker 2: Antonia, is it possible for you to quantify for us
Speaker 2: the sort of sales channel impact that you provide from video?
Speaker 2: So we talk endlessly about all of the projects domestic
Speaker 2: and overseas, and videos involved in the great build out.
Speaker 2: But as you know so well, and I spend hours
Speaker 2: tearing servers apart, nothing happens without HPE and others assembling
Speaker 2: the desigre. I just want a number on it, that's
Speaker 2: the thing.
Speaker 3: Yeah, Well, hard to put a number because you know,
Speaker 3: many of these buildouts are happening as we speak, and
Speaker 3: it takes a little bit of time to go from
Speaker 3: a you know, an agreement with a customer working with
Speaker 3: US and Nvidia, to building a deploying it and then
Speaker 3: eventually putting in production. But I can tell you, look,
Speaker 3: we are have a deep, long standing relationship with Nvidia.
Speaker 3: We are covering all segments of the market where it's
Speaker 3: these big, large buildouts in the service provider space. Whether
Speaker 3: it's sovereign or enterprise. And one of the things I'm
Speaker 3: really proud is that the work we put together with
Speaker 3: Nvidia last last year when we announced the Nvidia competing
Speaker 3: by HP and a private cloud, AI is growing very rapidly.
Speaker 3: In fact, one third of the net new orders we
Speaker 3: poked Q in Q two we're from enterprise. But at
Speaker 3: the same time we are completing one of the largest
Speaker 3: deployed MENS on the GB two hundred as we speak,
Speaker 3: and that's a very large deployment. And then we said
Speaker 3: that our backlog grew quarter over quarter now is three
Speaker 3: point two billion dollars on a commulative basis. For the
Speaker 3: last two years, we book over nine billion dollars and
Speaker 3: we have a multiples of the backlog in our pipeline.
Speaker 1: That one billion you attributed to AI in particular is good,
Speaker 1: but it's not as much as Dell, for example. I
Speaker 1: hate to put it so on the nose in that way, Antonio,
Speaker 1: but how much is perhaps Elliott on your board or
Speaker 1: others around you sort of saying, look, capitalize on AI
Speaker 1: even more.
Speaker 3: Yeah, now there has nothing to do. Look the previous
Speaker 3: quarter that we book ourselves a very large order, which
Speaker 3: is the one we are deploying today and that was
Speaker 3: not the all didn't do that. So this is a
Speaker 3: lumping business and you will see us also talking about
Speaker 3: some of the large order as we may get in
Speaker 3: the current quarter of subsequent quarter. So you know this
Speaker 3: goes back and forth. But ultimately you have to play
Speaker 3: with discipline and our goal is to grow in the
Speaker 3: eye and the rest of the business with a capital
Speaker 3: structure that works because the reality is that there is
Speaker 3: revenue growth, then there is profit accretion, and then is
Speaker 3: working capital. And our working capital is something you have
Speaker 3: to work very very closely because the timing from winning
Speaker 3: a deal to the time of revenue recognition in these
Speaker 3: large deals can be long and therefore you impact cash
Speaker 3: flow from operation. So we're trying to balance all of
Speaker 3: that while we deliver on our commitments both on the
Speaker 3: revenue growth and on the EPs growth.
Speaker 1: Well, you delivered in terms of six percent revenue growth
Speaker 1: on the court. We appreciate it Antonio andry Hpeco for
Speaker 1: joining us.