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Speaker 1: see across the Bloomberg Welcome h P results. Yes, we're
Speaker 1: gonna talk about it. We ought to. It's an amazing
Speaker 1: story of the company, and you know the heart of
Speaker 1: the five after ours, big move, big changes. Ah, people
Speaker 1: taking those numbers. But first let's get the latest in
Speaker 1: business news headlines from Charlie Pellow. All right, I thank
Speaker 1: you very much. Corey Johnson got to begin with HP.
Speaker 1: As Carol mentioned, up by roughly five percent after ours.
Speaker 1: HP Inc. Showed accelerating sales momentum in the second quarter,
Speaker 1: delivering growth in both PCs and printers for the first
Speaker 1: time in more than a half decade, revenue up six
Speaker 1: point nine percent to twelve point four billion in the
Speaker 1: period ending in April, topping analy assessment. It's for the
Speaker 1: fourth consecutive quarter, and again we've got more on the
Speaker 1: HP story coming up in just a moment right here
Speaker 1: on Bloomberg Markets. China's state owned company is already grappling
Speaker 1: with a leverage crackdown, now face the risk of higher
Speaker 1: financing costs overseas after Moody's Investors Service cut the nation's
Speaker 1: debt rating for the first time since nine But big picture,
Speaker 1: what about sustaining growth in China's economy. Mike Schumacher has
Speaker 1: head a great strategy at Wells Fargo Securities doesn't work well.
Speaker 1: You think about an eleven trillion economy growing at seven
Speaker 1: percent per year, what's at seven seventy billion. Think about
Speaker 1: the US nineteen trillion two percent three eighty billion per year.
Speaker 1: China's growing at twice our clip in dollar terms. You
Speaker 1: can't continue to grow at seven plus with that kind
Speaker 1: of size. So I agree it's a political problem, but
Speaker 1: at some point the math doesn't work out well. So
Speaker 1: you've got to be able to condition the population to
Speaker 1: accept five six percent growth. I do think the point, though,
Speaker 1: is that Germany's a Linda and Praxe Air have agreed
Speaker 1: on a blueprint for their combination, and leaving the fate
Speaker 1: of the proposed deal in the hands of a Linda
Speaker 1: supervisory board that remains divided on the transaction and has
Speaker 1: already derailed the plan once before. Practs Air shares up
Speaker 1: today by one percent. SMP five hundred index at a
Speaker 1: record up five to twenty four oh four, up three
Speaker 1: tenths of one percent down. Industrial is up seventy four,
Speaker 1: up four tenths of one percent, and has stack up
Speaker 1: twenty four again. There are four tenths of one percent
Speaker 1: on this headline to pass along from the Bloomberg Professional
Speaker 1: Service CBO releasing the score of the House passed healthcare bill.
Speaker 1: I'm Charlie Pellett. That's a Bloomberg business flash. All right,
Speaker 1: Charlie Pellet, thank you so much. You're listening to Bloomberg
Speaker 1: Markets on Bloomberg Radio. It's the ink appropriately name because
Speaker 1: it's the ink printing part of the HP business that
Speaker 1: was supposed to be a boring, not sexually part. Reboarding earnings. Uh,
Speaker 1: and they does look pretty good. To help us figure
Speaker 1: out what exactly that a non stornt of Austin joins
Speaker 1: us right now from Bloomberg intelligencis are senior or something
Speaker 1: left and hardware analysts and now these numbers are strong,
Speaker 1: and we've got you know, actual growth seven percent sales
Speaker 1: growth in the year of year business, clean quarter across
Speaker 1: the board. We knew that the PC business was going
Speaker 1: to be strong. What what was I was really impressed
Speaker 1: by was the print supplies business, where declines have been abating,
Speaker 1: but this time they actually posted growth. Remember that this
Speaker 1: is that portion of the business which you know when
Speaker 1: you combine printing and print supplices about four point seven
Speaker 1: four point seven billion business that was two percent year
Speaker 1: on year and supplies were up two percent. And this
Speaker 1: is a great margin business. Not like PCs which are
Speaker 1: mid single digit margin business. This is twenty plus percent
Speaker 1: margin business. So the fact that they posted revenue growth
Speaker 1: here the supply business, which was holding them back, that
Speaker 1: did well. Um for your guidance on the bottom line
Speaker 1: is good. Not much to complain about. We knew that
Speaker 1: component costs were going up. They did miss gross margins
Speaker 1: by a whisper, but again in the grand scheme of things,
Speaker 1: this was a very very well executed quarter. You like
Speaker 1: this company, right, I do? I mean the fact, look,
Speaker 1: this is a PC and printer business, Okay, so you
Speaker 1: have to get comfortable with the fact that this is
Speaker 1: a declining unit market. And they have done and this
Speaker 1: is the this is the these are the cards they
Speaker 1: have been dealt. But with with those cards, they boasted
Speaker 1: really good business, their executioners solid, the gaining share, the
Speaker 1: principalized business. They've seems to have turned the corner. Will
Speaker 1: C filled stick and component costs of going up like crazy,
Speaker 1: d RAM and A nand memory which are a substantial
Speaker 1: portion of PCs have gone up pretty substantially in the
Speaker 1: last seven quarters. To execute in and keep it almost
Speaker 1: gross pointing neutral in that kind of an environment is
Speaker 1: a testament their execution. That's interesting because the other side
Speaker 1: of the business is not doing so well at all,
Speaker 1: the HP side of the business. Yeah. So look there.
Speaker 1: When we walked out of the analyst day two years
Speaker 1: ago when the UH the split was about to be consummated,
Speaker 1: one of the impressions that I walked away with was
Speaker 1: that hb Q was an interesting business that was in
Speaker 1: the doldrums and had the potential turnaround versus HP, which
Speaker 1: was executing well but had the potential to fall apart
Speaker 1: given the nature of the cloud. Now fast forward UH
Speaker 1: six quarters later, hb executed really well, gained incredible amount
Speaker 1: of share, particularly at Microsoft and on the Azure cloud
Speaker 1: versus hb Q continued to not do so well. Now
Speaker 1: the PC businesses is turning around. They've cut some costs,
Speaker 1: managed margins, and they've improved the print supplies business. So
Speaker 1: hb Q is doing well and thus far, the PC
Speaker 1: table wind still remains versus the cloud headwind for HP
Speaker 1: still remains. We think that's a pretty big threat for
Speaker 1: them on that side. I thought the cloud business is
Speaker 1: so competitive right now, so it makes it tough for
Speaker 1: everybody involved. Let me just ask you though about HP
Speaker 1: the printer, the you know that business HPQ it's this year.
Speaker 1: Is that indicative and on of people just initially kind
Speaker 1: of underestimating that it could do actually okay and even
Speaker 1: better than okay? Or is it indicative that that it
Speaker 1: is a good business. I would say it's a great
Speaker 1: execution story in UM in a week overall context, I mean,
Speaker 1: you have to get comfortable with the PC and the
Speaker 1: printer business both are secular, low single digit declined businesses.
Speaker 1: Within that context, this is a great execution story. Right
Speaker 1: Nobody wants to hear the part that hey, PCs are
Speaker 1: a great place to be. How sexy is that story
Speaker 1: um printers, we are secular early structurally reducing the amount
Speaker 1: of stuff we print within that environment, how do we
Speaker 1: improve the number of printers sold, how do we improve
Speaker 1: the revenue the sp of the printers sold? And even
Speaker 1: if we can't do those things, how do we make
Speaker 1: sure that you buy more turner? Right? We just oxymoronic
Speaker 1: and something to some way, But how do we improve
Speaker 1: the profitability of that context within that? They've done really well.
Speaker 1: It's it's interesting. It's also interesting the financial performance here
Speaker 1: of just the income statement just works. It's got kind
Speaker 1: of nice gross margins for business that shouldn't have such
Speaker 1: good gross margins. And then keep pulling it off. Ye
Speaker 1: clean execution story. Corey well Well told printers eventually go away.
Speaker 1: I mean, we used to talk about a paperless news room.
Speaker 1: That hasn't happened. I print a lot of stuff still
Speaker 1: at home printers. Printers was more right. One of the
Speaker 1: things that's trying to do is commercial t D printing,
Speaker 1: banner printing, big image printing, and printing is reduced. They
Speaker 1: don't go printing reduces doesn't go away. Not too shabby.
Speaker 1: It's a mover, Yes, it's a mover. It's gonna be
Speaker 1: when we're gonna be watching and shown of Austin also
Speaker 1: a mover, part of our Boomberg Intelligence teams, senior semiconductor
Speaker 1: and hardware analysts, and of course b I is our
Speaker 1: in house group of analysts or everybody you are listening
Speaker 1: to Bloomberg Market's Carol Master, Corey Johnson, we've got to
Speaker 1: check in your top as his stories in just a
Speaker 1: moment right here on Bloomberg Radio. It's a world of
Speaker 1: national news headlines with Bloomberg News anchor Adrian Mitchell and
Speaker 1: onndon and one Studios in Washington, d C, Corey and Carol.
Speaker 1: Five suspects are now in custody as police confirm their
Speaker 1: investigation at the Manchester suicide bombing is focused on a network.
Speaker 1: The father of British born Salmon Abody says his son
Speaker 1: is innocent. He spoke to the AP from Libya hours
Speaker 1: before he and a brother of Abbady were arrested. The
Speaker 1: Washington Post reports the brother is suspected of planning an
Speaker 1: attack in Tripoli. Republicans aren't exactly falling in line to
Speaker 1: and worse, the President's budget proposal, and Budget Director mc
Speaker 1: mulvaney faced an onslaught of criticism from Democrats over its
Speaker 1: cuts two benefits for the poor. Bloomberg's Serf Chapman reports,
Speaker 1: well Vaney heard the budget plan denounced by Representative Barbara
Speaker 1: Lee of California. Never before, really have I seen such
Speaker 1: a brule and morally bankrupt budget. Well Vaney defended cuts
Speaker 1: and food stamps, healthcare, housing, and education hasn't necessary to
Speaker 1: boost economic growth. What about the standard of living for
Speaker 1: my grand children who aren't here yet, who will end
Speaker 1: up inheriting thirty train dollars in death, fifty hutter train dollars.
Speaker 1: Who's going to pay the bill? Congressman, My unborn grandchildren
Speaker 1: are paying for it, and I think that is morally bankrupt.
Speaker 1: Well Vaney said he was also trying to be fair
Speaker 1: to middle income taxpayers who get the bill but not
Speaker 1: the benefits or if Chapman Bloomberg Radio Washington. Just ahead
Speaker 1: of Memorial Day road trips, the typical fifty cent spring
Speaker 1: surgeon gas prices hasn't happened. Triple A says the average
Speaker 1: prices now to thirty six a gallon, within eight cent
Speaker 1: of a five year low for the date. Last month,
Speaker 1: the Petroleum Institute says consumption hit a record for April.
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