Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Shairs of HP are down this morning after giving a
Speaker 2: profit outlook that fell short of market expectations. The computer
Speaker 2: maker citing the impact of rising component costs and tariffs
Speaker 2: on goods from China. Joining us now is Enrique Lores
Speaker 2: HP CEO, as well as here on the desk with
Speaker 2: me co host of Bloomberg Technology Caroline Hyde. Enrique, let
Speaker 2: me first ask you about these job cuts. You're gonna
Speaker 2: cut two thousand workers or as many as two thousand
Speaker 2: workers to save three hundred million dollars a year, must
Speaker 2: be partially in response to these tariffs. Right, where are
Speaker 2: those jobs going to be lost?
Speaker 3: Well, first of all, thank you, thank you for having
Speaker 3: me here. This is part of the restructuring program that
Speaker 3: we started with the company almost three years ago, and
Speaker 3: we have been very selective and very strategical. Where to
Speaker 3: make these cuts is not only cats. We are more
Speaker 3: doing rebalancing of because at the same time we're investing
Speaker 3: in other areas. But that's really a part of our
Speaker 3: long term plan that we have put in place, and
Speaker 3: really we are now about to finish that at the
Speaker 3: end of the year.
Speaker 2: But where where are those jobs? Are American job's going
Speaker 2: to be lost here in Regain.
Speaker 3: I think it's all over the company. We have been
Speaker 3: identifying areas where we needed to be more precise, and
Speaker 3: we haven't shared externally the specifics or where this will happen,
Speaker 3: but I can tell you is one of the decisions
Speaker 3: we make with more care because we know that relevance
Speaker 3: this has for our employees.
Speaker 1: Okay, we know that you were looking at stripping out costs.
Speaker 1: When it comes to that stripping out of costs, is
Speaker 1: it as Mattin implies in reaction to also the component
Speaker 1: costs that are going up the China tariffs as you speak,
Speaker 1: as we've been speaking about on the Nning School, for example.
Speaker 3: I think it's a combination of multiple factors. When we
Speaker 3: look at the short term, clearly component costs and tariffs
Speaker 3: are going to be having an increase. But also this
Speaker 3: is part of the effort to make the company more
Speaker 3: competitive in the long term and to be able to
Speaker 3: invest in the areas where we see long term growth
Speaker 3: we have. We are positioning the company to lead in
Speaker 3: what we call the future of work, and this requires
Speaker 3: incremental investments in areas like AI, in areas to customer experience,
Speaker 3: and this has been driving these savings allow us to
Speaker 3: also invest in the areas of growth for the future.
Speaker 1: But how quickly is the AIPC, for example, really coming
Speaker 1: on tap and driving demand. I know there's good growth
Speaker 1: twenty five percent, but it's from a standing start. So ultimately,
Speaker 1: when do you think the percentage of aipcs will match
Speaker 1: what's already being shifted to the market.
Speaker 3: For example, our current expectation is that by the end
Speaker 3: of this year, aipcs will represent more than twenty five
Speaker 3: percent of all PC shipments. So it's really growing very fast.
Speaker 3: As you said, market wise, quarter over quarter we saw
Speaker 3: growth of twenty five percent, So they are starting to
Speaker 3: be a relevant part of our portfolio and a relevant
Speaker 3: part of the mix. And this is because of the
Speaker 3: incremental value that they bring. When customers use that, they
Speaker 3: can experience AI at the edge, which means it is
Speaker 3: lower cost, it is cheaper, it is faster than doing
Speaker 3: it in the cloud, and it's also more secure because
Speaker 3: you can use your local data, you don't need to
Speaker 3: bring the data to the cloud, and you can manage
Speaker 3: everything locally.
Speaker 2: So part of the reason that the Trump administration is
Speaker 2: putting on these tariffs is to bring production back to
Speaker 2: the US. And obviously there's not a lot of computer
Speaker 2: final assembly in this country or our printers for that matter.
Speaker 2: Are you reacting at all to this by moving production
Speaker 2: to the US.
Speaker 3: What we have learned during the last three years is
Speaker 3: that we always need to be looking at different scenarios
Speaker 3: of how to evolve our supply chain, and this is
Speaker 3: what we have done in the last two years. Moving
Speaker 3: manufacturing into the E is one of the scenarios that
Speaker 3: we are contemplating. We haven't made any decisions yet.
Speaker 1: How expensive would that make components? Though, Enrique, are we
Speaker 1: going to see pressure on component prices and your ultimate
Speaker 1: bottom line continue if you're having to shift the manufacturer
Speaker 1: closer to the US.
Speaker 3: I think one of the challenges of bringing manufacturing back
Speaker 3: to the US is what you just said is not
Speaker 3: only the assembly that we will be doing. Is what
Speaker 3: will it take to bring all the different components, all
Speaker 3: the different suppliers that we have and have the manufacturer here.
Speaker 3: And this is going to be a much longer process,
Speaker 3: and it's part of the evaluation that we are doing.
Speaker 1: Is it much incentive for you to do so? Other
Speaker 1: than political pressure? Are getting enough carrot rather than just
Speaker 1: stick coming from the federal government.
Speaker 3: I think there are different reasons to make our subbly
Speaker 3: chain food prim more flexible, and this is what we
Speaker 3: have been doing over the last years. One is requirements
Speaker 3: from different governments, and different governments have put in place
Speaker 3: different requirements. Also, another incentive is logistics cost. It will
Speaker 3: be of course cheaper to produce products closer to where
Speaker 3: customers are and also provides more flexibility and in terms
Speaker 3: of time for response to customer demand. So there are
Speaker 3: some benefits of building products locally and this is one
Speaker 3: of the reasons that where we have gone from a
Speaker 3: very centralized model that we had a few years ago
Speaker 3: to a more decentralized model that we have now.
Speaker 2: Riquet, how is the brand progressing? You know, somebody of
Speaker 2: my age knows the name Hewlett Packard, but not the
Speaker 2: simple two letter acronym HP. You have obviously a real
Speaker 2: opportunity to make a change there as the kids start
Speaker 2: using computers more for AI or as AI starts to
Speaker 2: drive sales. So how is pushing this brand in your
Speaker 2: growth as simply HP progressing?
Speaker 3: We think that the brand is one of the key
Speaker 3: acts that we have in the company and during the
Speaker 3: last twenty four months, we have significantly increased the investment
Speaker 3: that we do in the brand and we for example
Speaker 3: have signed some global sponsorships with keysport teams to be
Speaker 3: able to really make the brand more visible. And this,
Speaker 3: for example why we sign an agreement with Ferrari to
Speaker 3: be the title sponsor of Ferrari last year. Additionally, to
Speaker 3: bring kids. This is one of the to the brand
Speaker 3: and to the company. This is one of the areas
Speaker 3: where our gaming business is relevant. We are one of
Speaker 3: the key gaming suppliers in the world, and by having
Speaker 3: a strong presence in gaming, we can attract kids and
Speaker 3: young people to the brand.
Speaker 1: You're talking math's language when you bring up Ferrari and
Speaker 1: video games. I'm video caase that that matter, Enriquey. Going
Speaker 1: into the weeds there a bit on the tech side
Speaker 1: of things. You made a really interesting purchase recently of Humane.
Speaker 1: It was a much hyped Generator AI hardware and software
Speaker 1: company ex Apple founders. They sold to you the talent,
Speaker 1: the tech, but not actually the hardware pen I'm interested
Speaker 1: in You're not thinking about Generative AIS a hardware piece
Speaker 1: in that respect, how does it help your business?
Speaker 3: We think that the acquisition of Humane has been a
Speaker 3: very smart mood for us. We are getting a very
Speaker 3: talented team and we are getting key software technology that
Speaker 3: we can integrate in the rest of the portfolio. One
Speaker 3: of the key strategies of the company is really about
Speaker 3: integrating AI into all of our products so customers can
Speaker 3: experience AI ad ed and Humane has key technologies that
Speaker 3: will allow us to accelerate that development. So it's really
Speaker 3: a big part of where we are taking the company
Speaker 3: and we're very pleased having been able to do that.
Speaker 2: Enrique really appreciate the time today. And Ricky Loris there
Speaker 2: is the CEO of HP and of course thank you
Speaker 2: as well to Caroline Height of Bloomberg Tech and no
Speaker 2: really pret please.
Speaker 1: Bring us more when they mentioned Ferrari.
Speaker 2: To exactly, I mean, Ferrari is really a tech company, right,
Speaker 2: and each of their suspension pieces on the new SUV
Speaker 2: are like supercomputers in themselves and on.
Speaker 1: We seeing the pressure on the computer on wheels that
Speaker 1: is Tesla at the moment, and just ultimately all of
Speaker 1: these business Whenever you go to the mobile world congresses
Speaker 1: of the world and the big tech conferences, it always
Speaker 1: basically be about autos about to go there just as
Speaker 1: a little shout out, But in general it has been
Speaker 1: all about the autos, all about the intersection of car.
Speaker 1: And it's so interesting when you speak to Mark Gumman,
Speaker 1: just really saying the biggest loss that Apple ever made
Speaker 1: was not doing the car anymore.
Speaker 4: Same story, right, car play is so ubiquitous, but car
Speaker 4: plays at threat in some ways.
Speaker 2: Yes, No, that I think was the most interesting thing
Speaker 2: I learned last week of anything.
Speaker 1: But I also loved how you tried to push him on,
Speaker 1: like where are these job cucks happening? How are they happening?
Speaker 1: Because this is something we've got to focus on. When
Speaker 1: you got Autodeskla software company today also announcing thirteen hundred
Speaker 1: jobs going you got almost two thousand coming from HP.
Speaker 1: This is a drip drip, drip effect. We are not
Speaker 1: seeing the jobs being added that maybe we thought with technology,
Speaker 1: data centers don't employ that many people.
Speaker 4: And to the point that you've been making here so
Speaker 4: many different job cuts for different reasons around the world
Speaker 4: and in the United States. Remember Meta also announced some
Speaker 4: drob cuts as well. Caroly And we have to leave
Speaker 4: it there.
Speaker 1: We thank you.
Speaker 4: You're a real hero to the whole network this week