February 28, 2025 • 9 mins
HP CEO Enrique Lores discusses earnings, cost cutting, jobs and more with Bloomberg's Matt Miller, Sonali Basak and Caroline Hyde.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Shairs of HP are down this morning after giving a
profit outlook that fell short of market expectations. The computer
maker citing the impact of rising component costs and tariffs
on goods from China. Joining us now is Enrique Lores
HP CEO, as well as here on the desk with
me co host of Bloomberg Technology Caroline Hyde. Enrique, let
(00:30):
me first ask you about these job cuts. You're gonna
cut two thousand workers or as many as two thousand
workers to save three hundred million dollars a year, must
be partially in response to these tariffs. Right, where are
those jobs going to be lost?
Speaker 3 (00:46):
Well, first of all, thank you, thank you for having
me here. This is part of the restructuring program that
we started with the company almost three years ago, and
we have been very selective and very strategical. Where to
make these cuts is not only cats. We are more
doing rebalancing of because at the same time we're investing
in other areas. But that's really a part of our
(01:08):
long term plan that we have put in place, and
really we are now about to finish that at the
end of the year.
Speaker 2 (01:13):
But where where are those jobs? Are American job's going
to be lost here in Regain.
Speaker 3 (01:18):
I think it's all over the company. We have been
identifying areas where we needed to be more precise, and
we haven't shared externally the specifics or where this will happen,
but I can tell you is one of the decisions
we make with more care because we know that relevance
this has for our employees.
Speaker 1 (01:35):
Okay, we know that you were looking at stripping out costs.
When it comes to that stripping out of costs, is
it as Mattin implies in reaction to also the component
costs that are going up the China tariffs as you speak,
as we've been speaking about on the Nning School, for example.
Speaker 3 (01:51):
I think it's a combination of multiple factors. When we
look at the short term, clearly component costs and tariffs
are going to be having an increase. But also this
is part of the effort to make the company more
competitive in the long term and to be able to
invest in the areas where we see long term growth
we have. We are positioning the company to lead in
(02:12):
what we call the future of work, and this requires
incremental investments in areas like AI, in areas to customer experience,
and this has been driving these savings allow us to
also invest in the areas of growth for the future.
Speaker 1 (02:27):
But how quickly is the AIPC, for example, really coming
on tap and driving demand. I know there's good growth
twenty five percent, but it's from a standing start. So ultimately,
when do you think the percentage of aipcs will match
what's already being shifted to the market.
Speaker 3 (02:40):
For example, our current expectation is that by the end
of this year, aipcs will represent more than twenty five
percent of all PC shipments. So it's really growing very fast.
As you said, market wise, quarter over quarter we saw
growth of twenty five percent, So they are starting to
be a relevant part of our portfolio and a relevant
(03:02):
part of the mix. And this is because of the
incremental value that they bring. When customers use that, they
can experience AI at the edge, which means it is
lower cost, it is cheaper, it is faster than doing
it in the cloud, and it's also more secure because
you can use your local data, you don't need to
bring the data to the cloud, and you can manage
(03:23):
everything locally.
Speaker 2 (03:24):
So part of the reason that the Trump administration is
putting on these tariffs is to bring production back to
the US. And obviously there's not a lot of computer
final assembly in this country or our printers for that matter.
Are you reacting at all to this by moving production
(03:44):
to the US.
Speaker 3 (03:47):
What we have learned during the last three years is
that we always need to be looking at different scenarios
of how to evolve our supply chain, and this is
what we have done in the last two years. Moving
manufacturing into the E is one of the scenarios that
we are contemplating. We haven't made any decisions yet.
Speaker 1 (04:05):
How expensive would that make components? Though, Enrique, are we
going to see pressure on component prices and your ultimate
bottom line continue if you're having to shift the manufacturer
closer to the US.
Speaker 3 (04:17):
I think one of the challenges of bringing manufacturing back
to the US is what you just said is not
only the assembly that we will be doing. Is what
will it take to bring all the different components, all
the different suppliers that we have and have the manufacturer here.
And this is going to be a much longer process,
and it's part of the evaluation that we are doing.
Speaker 1 (04:38):
Is it much incentive for you to do so? Other
than political pressure? Are getting enough carrot rather than just
stick coming from the federal government.
Speaker 3 (04:48):
I think there are different reasons to make our subbly
chain food prim more flexible, and this is what we
have been doing over the last years. One is requirements
from different governments, and different governments have put in place
different requirements. Also, another incentive is logistics cost. It will
be of course cheaper to produce products closer to where
(05:10):
customers are and also provides more flexibility and in terms
of time for response to customer demand. So there are
some benefits of building products locally and this is one
of the reasons that where we have gone from a
very centralized model that we had a few years ago
to a more decentralized model that we have now.
Speaker 2 (05:29):
Riquet, how is the brand progressing? You know, somebody of
my age knows the name Hewlett Packard, but not the
simple two letter acronym HP. You have obviously a real
opportunity to make a change there as the kids start
using computers more for AI or as AI starts to
(05:50):
drive sales. So how is pushing this brand in your
growth as simply HP progressing?
Speaker 3 (05:57):
We think that the brand is one of the key
acts that we have in the company and during the
last twenty four months, we have significantly increased the investment
that we do in the brand and we for example
have signed some global sponsorships with keysport teams to be
able to really make the brand more visible. And this,
(06:17):
for example why we sign an agreement with Ferrari to
be the title sponsor of Ferrari last year. Additionally, to
bring kids. This is one of the to the brand
and to the company. This is one of the areas
where our gaming business is relevant. We are one of
the key gaming suppliers in the world, and by having
a strong presence in gaming, we can attract kids and
(06:40):
young people to the brand.
Speaker 1 (06:42):
You're talking math's language when you bring up Ferrari and
video games. I'm video caase that that matter, Enriquey. Going
into the weeds there a bit on the tech side
of things. You made a really interesting purchase recently of Humane.
It was a much hyped Generator AI hardware and software
company ex Apple founders. They sold to you the talent,
(07:04):
the tech, but not actually the hardware pen I'm interested
in You're not thinking about Generative AIS a hardware piece
in that respect, how does it help your business?
Speaker 3 (07:13):
We think that the acquisition of Humane has been a
very smart mood for us. We are getting a very
talented team and we are getting key software technology that
we can integrate in the rest of the portfolio. One
of the key strategies of the company is really about
integrating AI into all of our products so customers can
(07:35):
experience AI ad ed and Humane has key technologies that
will allow us to accelerate that development. So it's really
a big part of where we are taking the company
and we're very pleased having been able to do that.
Speaker 2 (07:49):
Enrique really appreciate the time today. And Ricky Loris there
is the CEO of HP and of course thank you
as well to Caroline Height of Bloomberg Tech and no
really pret please.
Speaker 1 (08:01):
Bring us more when they mentioned Ferrari.
Speaker 2 (08:03):
To exactly, I mean, Ferrari is really a tech company, right,
and each of their suspension pieces on the new SUV
are like supercomputers in themselves and on.
Speaker 1 (08:14):
We seeing the pressure on the computer on wheels that
is Tesla at the moment, and just ultimately all of
these business Whenever you go to the mobile world congresses
of the world and the big tech conferences, it always
basically be about autos about to go there just as
a little shout out, But in general it has been
all about the autos, all about the intersection of car.
And it's so interesting when you speak to Mark Gumman,
just really saying the biggest loss that Apple ever made
was not doing the car anymore.
Speaker 4 (08:36):
Same story, right, car play is so ubiquitous, but car
plays at threat in some ways.
Speaker 2 (08:41):
Yes, No, that I think was the most interesting thing
I learned last week of anything.
Speaker 1 (08:47):
But I also loved how you tried to push him on,
like where are these job cucks happening? How are they happening?
Because this is something we've got to focus on. When
you got Autodeskla software company today also announcing thirteen hundred
jobs going you got almost two thousand coming from HP.
This is a drip drip, drip effect. We are not
seeing the jobs being added that maybe we thought with technology,
data centers don't employ that many people.
Speaker 4 (09:06):
And to the point that you've been making here so
many different job cuts for different reasons around the world
and in the United States. Remember Meta also announced some
drob cuts as well. Caroly And we have to leave
it there.
Speaker 1 (09:14):
We thank you.
Speaker 4 (09:15):
You're a real hero to the whole network this week
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Shairs of HP are down this morning after giving a
profit outlook that fell short of market expectations. The computer
maker citing the impact of rising component costs and tariffs
on goods from China. Joining us now is Enrique Lores
HP CEO, as well as here on the desk with
me co host of Bloomberg Technology Caroline Hyde. Enrique, let
(00:30):
me first ask you about these job cuts. You're gonna
cut two thousand workers or as many as two thousand
workers to save three hundred million dollars a year, must
be partially in response to these tariffs. Right, where are
those jobs going to be lost?
Speaker 3 (00:46):
Well, first of all, thank you, thank you for having
me here. This is part of the restructuring program that
we started with the company almost three years ago, and
we have been very selective and very strategical. Where to
make these cuts is not only cats. We are more
doing rebalancing of because at the same time we're investing
in other areas. But that's really a part of our
(01:08):
long term plan that we have put in place, and
really we are now about to finish that at the
end of the year.
Speaker 2 (01:13):
But where where are those jobs? Are American job's going
to be lost here in Regain.
Speaker 3 (01:18):
I think it's all over the company. We have been
identifying areas where we needed to be more precise, and
we haven't shared externally the specifics or where this will happen,
but I can tell you is one of the decisions
we make with more care because we know that relevance
this has for our employees.
Speaker 1 (01:35):
Okay, we know that you were looking at stripping out costs.
When it comes to that stripping out of costs, is
it as Mattin implies in reaction to also the component
costs that are going up the China tariffs as you speak,
as we've been speaking about on the Nning School, for example.
Speaker 3 (01:51):
I think it's a combination of multiple factors. When we
look at the short term, clearly component costs and tariffs
are going to be having an increase. But also this
is part of the effort to make the company more
competitive in the long term and to be able to
invest in the areas where we see long term growth
we have. We are positioning the company to lead in
(02:12):
what we call the future of work, and this requires
incremental investments in areas like AI, in areas to customer experience,
and this has been driving these savings allow us to
also invest in the areas of growth for the future.
Speaker 1 (02:27):
But how quickly is the AIPC, for example, really coming
on tap and driving demand. I know there's good growth
twenty five percent, but it's from a standing start. So ultimately,
when do you think the percentage of aipcs will match
what's already being shifted to the market.
Speaker 3 (02:40):
For example, our current expectation is that by the end
of this year, aipcs will represent more than twenty five
percent of all PC shipments. So it's really growing very fast.
As you said, market wise, quarter over quarter we saw
growth of twenty five percent, So they are starting to
be a relevant part of our portfolio and a relevant
(03:02):
part of the mix. And this is because of the
incremental value that they bring. When customers use that, they
can experience AI at the edge, which means it is
lower cost, it is cheaper, it is faster than doing
it in the cloud, and it's also more secure because
you can use your local data, you don't need to
bring the data to the cloud, and you can manage
(03:23):
everything locally.
Speaker 2 (03:24):
So part of the reason that the Trump administration is
putting on these tariffs is to bring production back to
the US. And obviously there's not a lot of computer
final assembly in this country or our printers for that matter.
Are you reacting at all to this by moving production
(03:44):
to the US.
Speaker 3 (03:47):
What we have learned during the last three years is
that we always need to be looking at different scenarios
of how to evolve our supply chain, and this is
what we have done in the last two years. Moving
manufacturing into the E is one of the scenarios that
we are contemplating. We haven't made any decisions yet.
Speaker 1 (04:05):
How expensive would that make components? Though, Enrique, are we
going to see pressure on component prices and your ultimate
bottom line continue if you're having to shift the manufacturer
closer to the US.
Speaker 3 (04:17):
I think one of the challenges of bringing manufacturing back
to the US is what you just said is not
only the assembly that we will be doing. Is what
will it take to bring all the different components, all
the different suppliers that we have and have the manufacturer here.
And this is going to be a much longer process,
and it's part of the evaluation that we are doing.
Speaker 1 (04:38):
Is it much incentive for you to do so? Other
than political pressure? Are getting enough carrot rather than just
stick coming from the federal government.
Speaker 3 (04:48):
I think there are different reasons to make our subbly
chain food prim more flexible, and this is what we
have been doing over the last years. One is requirements
from different governments, and different governments have put in place
different requirements. Also, another incentive is logistics cost. It will
be of course cheaper to produce products closer to where
(05:10):
customers are and also provides more flexibility and in terms
of time for response to customer demand. So there are
some benefits of building products locally and this is one
of the reasons that where we have gone from a
very centralized model that we had a few years ago
to a more decentralized model that we have now.
Speaker 2 (05:29):
Riquet, how is the brand progressing? You know, somebody of
my age knows the name Hewlett Packard, but not the
simple two letter acronym HP. You have obviously a real
opportunity to make a change there as the kids start
using computers more for AI or as AI starts to
(05:50):
drive sales. So how is pushing this brand in your
growth as simply HP progressing?
Speaker 3 (05:57):
We think that the brand is one of the key
acts that we have in the company and during the
last twenty four months, we have significantly increased the investment
that we do in the brand and we for example
have signed some global sponsorships with keysport teams to be
able to really make the brand more visible. And this,
(06:17):
for example why we sign an agreement with Ferrari to
be the title sponsor of Ferrari last year. Additionally, to
bring kids. This is one of the to the brand
and to the company. This is one of the areas
where our gaming business is relevant. We are one of
the key gaming suppliers in the world, and by having
a strong presence in gaming, we can attract kids and
(06:40):
young people to the brand.
Speaker 1 (06:42):
You're talking math's language when you bring up Ferrari and
video games. I'm video caase that that matter, Enriquey. Going
into the weeds there a bit on the tech side
of things. You made a really interesting purchase recently of Humane.
It was a much hyped Generator AI hardware and software
company ex Apple founders. They sold to you the talent,
(07:04):
the tech, but not actually the hardware pen I'm interested
in You're not thinking about Generative AIS a hardware piece
in that respect, how does it help your business?
Speaker 3 (07:13):
We think that the acquisition of Humane has been a
very smart mood for us. We are getting a very
talented team and we are getting key software technology that
we can integrate in the rest of the portfolio. One
of the key strategies of the company is really about
integrating AI into all of our products so customers can
(07:35):
experience AI ad ed and Humane has key technologies that
will allow us to accelerate that development. So it's really
a big part of where we are taking the company
and we're very pleased having been able to do that.
Speaker 2 (07:49):
Enrique really appreciate the time today. And Ricky Loris there
is the CEO of HP and of course thank you
as well to Caroline Height of Bloomberg Tech and no
really pret please.
Speaker 1 (08:01):
Bring us more when they mentioned Ferrari.
Speaker 2 (08:03):
To exactly, I mean, Ferrari is really a tech company, right,
and each of their suspension pieces on the new SUV
are like supercomputers in themselves and on.
Speaker 1 (08:14):
We seeing the pressure on the computer on wheels that
is Tesla at the moment, and just ultimately all of
these business Whenever you go to the mobile world congresses
of the world and the big tech conferences, it always
basically be about autos about to go there just as
a little shout out, But in general it has been
all about the autos, all about the intersection of car.
And it's so interesting when you speak to Mark Gumman,
just really saying the biggest loss that Apple ever made
was not doing the car anymore.
Speaker 4 (08:36):
Same story, right, car play is so ubiquitous, but car
plays at threat in some ways.
Speaker 2 (08:41):
Yes, No, that I think was the most interesting thing
I learned last week of anything.
Speaker 1 (08:47):
But I also loved how you tried to push him on,
like where are these job cucks happening? How are they happening?
Because this is something we've got to focus on. When
you got Autodeskla software company today also announcing thirteen hundred
jobs going you got almost two thousand coming from HP.
This is a drip drip, drip effect. We are not
seeing the jobs being added that maybe we thought with technology,
data centers don't employ that many people.
Speaker 4 (09:06):
And to the point that you've been making here so
many different job cuts for different reasons around the world
and in the United States. Remember Meta also announced some
drob cuts as well. Caroly And we have to leave
it there.
Speaker 1 (09:14):
We thank you.
Speaker 4 (09:15):
You're a real hero to the whole network this week
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