Bloomberg Audio Studios, podcasts, radio news.
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 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?
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 long term plan that we have put in place, and really we are now about to finish that at the end of the year.
But where where are those jobs? Are American job's going to be lost here in Regain.
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.
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.
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 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.
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.
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 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 everything locally.
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 to the US.
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.
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.
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.
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.
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 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.
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 drive sales. So how is pushing this brand in your growth as simply HP progressing?
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, 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 young people to the brand.
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, 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?
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 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.
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.
Bring us more when they mentioned Ferrari.
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.
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.
Same story, right, car play is so ubiquitous, but car plays at threat in some ways.
Yes, No, that I think was the most interesting thing I learned last week of anything.
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.
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.
We thank you.
You're a real hero to the whole network this week