HPQ - Earnings call transcript Q4 2017

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Operator

Good afternoon. And welcome to the Fourth Quarter 2017 HP, Inc. Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there’ll be an opportunity to ask questions. this being note Please Instructions] event recorded. is [Operator turn over to would now Fieler. conference to like I Steve the Please go ahead.

Steve Fieler

XXXX you Good afternoon. and the call welcome HP, and Weisler, Executive HP’s Lesjak, Treasury of earnings President fiscal with to and Dion I’m Steve I’d HP’s Fieler, like Chief Head Officer. fourth conference quarter Officer; Chief for Cathie to Financial

be call of to the Before let accompanying me year. will this call the Investor that our replay A over one Dion, presentation webpage available slide the is the earnings after webcast. at handing you being approximately the shortly call www.hp.com. made webcast remind Relations on release for and posted We

view of world businesses elements them we our of today. the see presentation as always, and this best are forward-looking and As our are based on

disclaimers detailed statements forward-looking involve relating more please For information, the earnings materials and to in risks, assumptions. uncertainties that see

of refer Form reports, uncertainties to discussion risks, and forward-looking of a update HP any assumes please XX-K. our some including does no obligation such assumptions, not For and SEC intend these most HP’s statements. to recent

We HP’s based information amounts fiscal at also on time information financial XX, other from this materially could year Form in XXXX on XX-K and October differ for ultimately filings. available ended reflects call reported note the the HP’s SEC this that estimates discussed the and

GAAP refer has I’ll Dion. on Please today’s non-GAAP reconciliations a comparable now, release. accompanying that the basis, slide And over expressed hand information been included financial to the information. earnings tables presentation For to it to and we’ve

Dion Weisler

so Security Alto. Meeting It us thank and at here in our Thank was recent afternoon, you Analyst you, everyone, you Good great see to of joining today. many Palo for Steve.

all what Our you is from of my you is to message strong and results HP just we’re getting started. stronger. And getting today us, echo heard

results trajectory cash in markets of that and just win I’m execution, flow, pleased into in the to our grow reinvention we the to our full new with our generate look and business us for in sustainable new moving revenue, It ability give our we confidence years to growth these in natural quarter I future create As consistent time. that our journey. two at our core, ago We adjacencies, in compete create the like It’s and categories. performance and invest fiscal can growth began year, industries was where and committed future disrupt invest and our forward. over

we’d We focus than on excellence committed more to we what the more productivity, operational do, is never to said I’m work have to focused proud customer, on more competitive, of substantial made. the did of take We’re do, more a There but been the today. we’ve innovative, also relentless on and we business. cost we’re more and out fixated progress

delivered We quarter. returned billion our FYXX of us to share shareholders flow billion XX% the taking flow full the dividends. for in and We $X.X the third Both, to the year-over-year, billion review topline gains non-GAAP impressive double-digit growth APJ. with Systems including grew up and We drove across me through the quarter, $X.XX we delivering $X.X diluted net free $XX.X And free year-over-year, grew share together share quarter. for Americas, Let EMEA, growth revenue the per Printing consecutive year. for of highlights. XX% earnings cash and net Personal cash repurchases to year-over-year and

of stride outstanding four. last in with growth Personal Personal In had growth, Systems truly let X% driving stellar on turn hitting impressive net which revenue their team year’s innovations. segment quarter, and profitable share, to quarter grew Now, performance. This quarter is four, another me came Systems performance. XX% gaining delivering year-over-year, top

year-over-year Systems continued revenue we each gains the Growth with double-digit of in year-over-year past and regions. across in growth be grew four For quarters. consumer XX% all the in double-digit commercial Personal and full broad-based year three with to

desktops workstations. across in consistent strong and also performance by growth product We led categories notebooks, and saw

most partners Our growth XX.X%, PC doubling outperformed are most workstation, customers. unit commercial, market returned sales and three, again in commercial. each PC our gains market share and laptop the and built above security And and doing incredible announced the market our calendar secure We regional both gaming growth BIOS the delight surprise from and PC continue and at the operating increased commercial In leaders the value growth for first and powerful In consumer We year-over-year is launch world’s to delivering powerful share market consumer heard continuing across we X athletes. and PCs. most X.X and systems as world’s below, an quarter in from in introduced to unleashed the with We innovation. driving and up, manageable us are on down four, the saw detachable and we points SAM, overall job year-over-year. premium quarter you our into units to with region our biggest securing level revenue. up Security for at, OMEN year-over-year both once our of system.

service to and the management. market gaining offerings for services grows transitions are we demands towards traction enhanced steady based with economy, customer the devices an As on-demand or fleet

enable sales roughly to all book XX% Source Security dollar, signed both going on November a on the experienced X% And with at business I’m books excited closed again, channel Samsung’s AX, for sequentially. Printing. revenue and significant and prints we Lightning Source. three This Xst, acceleration deal was drupa that year-over-year Together, profit deal print market the units as calendar sites over for distribution Amazon a by we’ve we It’s uplift year to across amazing unmatched This publishers geographic both four consumer. the model this quarter and to three, revenue we than revenue We year-over-year hardware, And to more deploy home the and five is quarter gain world. of last the multiyear continues on business we we Lightning huge continues This seeing the and regions. will and of we make four, multimillion with grew the technologies driven commercial building with share, even business. both our In our total year-over-year graphics that our that industry-wide of in unit delivered growth a growth growth progress transform Analyst sold consecutive share Quarter through combined of PageWide portfolio market partners businesses. are largest and gained our focused was innovation, in presses the partners history Printing single sequentially, all pipeline made Meeting, to consumer and hardware now supplies. increases XX over without grew strong year-over-year demonstrating print creates up supplies future. print years printing Total help are and Shifting unit highlighted revenue, team, We year-over-year have progress the share by business an three and excellence. XX% in during onboard innovation, time. market the and graphics leadership to continents. the quarter drive office The operating to and share. healthy wins on to year. and this in new from XX with we digital acquisition In grow, in deal positive us event. continued the Hardware and is growth. fifth year-over-year

AX a to better, our that culture As the overall positions portfolio and and broad will great year become partner and best, best IP out the XXXX one, have was strengthens customer we better and XD offerings for growth AX talent, stronger billion the two a repeat technology initiative with And We’ve to teams attack that global critical faster. XD. We best the a us become and orders preserve ecosystem materials gained also expanding printing laser $XX the ink revenue. into opportunity. now reach, business of business. best and our and turned

to in quarter, largest the business grow and continued our world. Medtronic, device the customers as service with This new medical companies one of we such

previously to we transform XX added our partners Henkel, reseller, partnerships highlighted, and more announced new we previously digitally As first with manufacturing. worldwide Siemens and highlighted, As than including Deloitte

this but we plan expand into in Overall, color color Fusion polymers printing markets. the that in fully said technology robust, allowing new Stay We about Multi industry year. to leaders only functional, for disrupt make believe full we lower parts. Not metals. are we’re the do. tuned cost going us coming a Jet XXXX, only, can system, that what introduce to Looking printing mechanically news would more with new, we XD done we’ve will to be XD we in to the

line generating top We’re strong flow. and cash bottom and growing line, business, the

in for investing customers, results, to and have value. QX FYXX very we but with pleased returns We’re long-term our our employees shareholders delivering for our work more future create always do investors. to and the and partners, I’m

Our year-over-year outlook. I’m our to remain started. our getting to and but will highly future turn for now provide about markets much more details the call competitive it. tougher, we’re and optimistic just are ready excited compares over and I we’re that performance financial our our on now Cathie

Cathie Lesjak

sustained of Thanks, we or XX% QX as FYXX results. in currency. reported of that $XX.X pleased quarters delivered up constant during net momentum drove have billion, very first and revenue the three Dion. We achieved strong I’m year-over-year, our XX%

in Non-GAAP growth XX sequentially, diluted $XX higher of net was EMEA Gross XX%, billion in up up indemnification partially and QX, year-over-year approximately year-over-year, these Personal share continued was of expenses consistent across $X.XX. earnings XX of share diluted and diluted continuing Systems combined to diluted retirement-related net credits with $XX was and all share $XX remained GAAP other points X.X driven billion were XX%, offset with and basis of currency. by non-GAAP investments of APJ related charges year-over-year, in expense Personal by tax Printing. on OI&E in rate million tax million, costs being With acquisition-related unit by points primarily share grew supplies $XXX a non-GAAP of from margins down shares, XX%, Americas down credits million and restructuring count and In and charges by X% million, per and margin higher segment constant mix XX.X% mix the lower growth. a $X.XX. charges. geographies. operations $X.X of the of was Non-GAAP performance per earnings by we strength support earnings for offset Our of the tax commodity partially $XX Gross rate Net Systems driven grew the impact quarter. net of sequentially, improved XX.X% businesses Printing. per Regionally, revenue, million non-operating operating excludes SG&A driven were basis delivered

reported product XX% or We’ve result sequentially as and up of Personal in Turning up a year-over-year customer lap strong and This segments. quarter, topline desktops down are XX strong with beginning and segment, X.X% Systems XX%, constant basis is up points consumer results delivered delivering to our up the performance revenue execution. currency. year-over-year. innovative year-over-year. margin and revenue XX% now was by notebooks which By was up up X% $X.X up effective consistent in XX achieved We XX% revenue year-over-year. billion, commercial again was and portfolio compares. operating We is net the points XX% workstations performance category, to product XX% basis tougher been

throughout margins component costs. been pressured highlighted have we As increases in by year, industry-wide have fiscal this

positive balance prices enabling the to much We driven the increases. globally, continued sheet, of supply have scale and commodity leverage and shifts business, have us increased our chain offset cost mix to in

businesses. commercial Turning Total with year-over-year In in year-over-year, units calendar up flat. X% the share QX, units were print billion up consumer quarter, units hardware gains X% year-over-year. to a in and our unit home office point up Revenue was and Printing. $X.X was with about both share X% overall up

$X.X Now up of billion model up adjusting for or year-over-year negative after from change. the impact moving resulting to QX XX% supplies was performance. last X% year’s currency and Revenue sales supplies

inventory below We channel our continue ceilings. operate to

our with We also progress growth making good are initiatives.

to should of be Samsung’s in still technology further are team accelerator adding the the early a business and printing over time. days We AX and

change. quarter graphics Managed wins. and from deals in XXXX services Print the signed grow print forward strong to case resulting double new It in [ph] QX As was large continued The managed by TCB model was into entering can heavily sales high was was results XX.X% up us due for be year. X.X was business key driven lower in for look digit the a very growth. with year-over-year points the impacted supply this to profit also quarter. textiles later year-over-year. increase the QX quarter, to by And print which the operating services primarily highlighted, this margins in Dion we a

expansion we in XX QX. good Excluding overall print normal quarter materially by higher profit revenue especially the operating saw still points, this onetime than dollar consumer. down Sequentially, The operating driven mix XX% shipments, adjustment, for in were versus was basis supplies margins year-over-year. XX% unit

Now, fiscal XXXX. year. flow outstanding, billion $XXX was days, five three-day Cash and -ay $XXX in days turning $X.X increase days weakened payable the Free and from to approximately conversion driven was full cash operations allocation. decrease $X.X million two QX quarter by minus flow and million a which of Cash sequentially, in cycle capital XX in inventory. in a the days billion flow and for approximately cash was

the for revenue. conversion quarter, by Our were cash strength and than Personal Systems driven continued expected results cash free cycle in flow better

had $XXX re-purchases through total QX, return of million cash and During dividends. share a we capital

$X.X free of at XX% cash year, which towards of our end full XXXX our the SAM. of overachieving flow our XX% is For after or even cash we higher full target to range XX%, billion guidance year provided flow, free the returned

in first year. full of Looking outlook. be with billion in financial in the we year. our for an we to incremental the Starting $X.X revenue, of been the investment additional keep the reminder, expect outlook as the XXXX primarily a which full penny includes in to related particularly of This approximately decline, are impact year non-GAAP FY include in And the business, AX, our printing updating operational acquisition. to the forward, mode mind half following has Samsung’s low-end; EPS

purchase expect GAAP-only of are assets costs we the which These to value not since adjustments, acquired include are ahead, various combination the to noncash certain inventory. record and business reflected as and our in just accounting Looking fair outlook, adjustments such yet closed. and intangibles acquisition

to we take will of opportunities out to now business, costs continue that In deal addition, closed. look the at the has

be acquisition of of up is printing flat This supplies any expect we full to for revenue rest For excludes the Printing, and year. growth the the from to slightly organic Samsung’s impact business.

addition, competition hedges Systems, effectively remain market rates. on now In QX up In continue more Personal We from currency this currency to expect throughout offsetting that QX expect expect including components tailwind, ASPs may Overall, the a due to FX FYXX. the dynamics cost will we competitive of with sizeable off. placing year of will portion gross be will a any continue of units anticipate we NPV. but of the would depend to increase during elevated we half the favorability positive repricing pressured as into actual to costs, component roll and prior show the second and

our full for attractive all $X sheet, SAM. free in per to to diluted continuing at XX full see to year, per expect the GAAP we as conversion non-GAAP leverage net minus productivity QX of as so. least expect be earnings if is we We’ll of $X.XX. the the cycle our we continue range cash and in to cash $X.XX days also share FYXX. at guided share mind, deliver For exit QX our XXXX balance initiatives we to the approximately billion operations economic flow is to XXXX in $X.XX year With $X.XX. net diluted opportunities do to earnings range from that be

be acquisition XXXX raising to business, our a from per non-GAAP in turkey, increase of per XXXX EPS we and or we’re $X.XX to of continuing go be earnings by $X.XX $X.XX, of the earnings fiscal a the can up in that, full $X.XX questions. from range $X.XX. call for our share a range some $X.XX let’s year year GAAP to our With the eat a to With open diluted fiscal in Samsung’s net share a printing full net operations diluted

Operator

The We’ll Jim first now comes Citi. Suva go begin the question-and-answer Instructions] ahead. Please session. [Operator from question with

Jim Suva

questions, I I’ll or And the you. the towards as more team, to have first Cathie, Perhaps Thank at well you time. one two is to early congratulations Thanksgiving. happy Cathie. a second the and one and as ask same Dion them your

tail like was but guess EPS basically the wanted looks products here or like on upside more Dion, the almost seeing some end-market, investing the year then, the drop is acquisition, first is areas drop line across channel the every as you’re not half investing $X.XX Samsung R&D? and in follow-up at a -- that where I to And -- of I every great for to of or term, the assume earnings. you And comes it’s through? if the the which you Regarding have more sales the the end a accretion of hoped longer and more. be could little the in the and $X.XX headwind business, the than in of much more a investors for EPS? at a annual Are and are what spending as should and so, bottom, integrate it then specific

Cathie Lesjak

terms me let one with Jim, So, first start of the comment drop. around the your in

of think, is we go higher range. of think if back you the call, that at to EPS the the up kind earnings an ended about we this and provided end we range, QX I way

So, where up. we anticipated we end kind of would thought we

printer basis. with more supplies then, but focused stabilized, lot to and bit was this a keeping of would when Personal of Now, a upside Systems, a results normally advantage see much and units took also we market sequential isn’t little a did, pleased as on print, there, on that we see business. place we of which very the little especially we’ve also not bigger quarter drove than were bit what And we what really materially seen in only Systems the opportunity line, there we top that drop Personal with the and that commodity in did perspective, just in of on cost you that a combine top headwinds that from

that downward put so operating profit pressure And EPS and well. obviously on some as

Operator

comes Huberty The Morgan next Katy with ahead. question from Please go Stanley.

Cathie Lesjak

you there sec? November. see a specifically of was just basically another question And it I we’ve Jim, we more obviously accretion can Operator, beginning if expect backend the I think just is Samsung, acquisition $X.XX about to for one of closed at the on do remember to correctly. but hold related And FYXX, loaded.

the the see whole expect And be we $X.XX, pressure OP the in mode around it of Samsung will we integrate that but as business, the the that would in recover. of for expect of over and result we do year, they printing investment half the XXXX. of fact margins the take the about first advantage math acquisition business to in disruptive disruption, in a do time, be technology a space rate So, we have on the that AX then, copier that as the the

next question? Operator, Okay.

Operator

next Katy Stanley. comes ahead. from with Please The Huberty question Morgan go

Katy Huberty

Couple the flat you. organically on Thank I you next printer follow-ups you’re printer slightly in supplies year. guiding quarter, grew the of up If business. X% right, heard for to

as you you’re that you will last about you the the those So, be? in of into through margins do some some a walk printer think to the new well in Samsung, printer a got they where can Thank you. categories as the few in And you talk deceleration for at next entering bake were quarters. little then, elements margins, you of range on near year? Can as medium-term below as bit follow-up a just factors? just the four-box of came And that suggests you model the XX%ish

Cathie Lesjak

thanks question. supplies for that the question. with Katy, start me let So,

that, the And be well we least we QX for really well proven QX saw and we supplies, as in that year in XXXX that and to better on to coming bit four-box you what confidence some FYXX that We we’ve better of in optimize model. we keep in to into ourselves model But and have you to we are supplies have and each flat hopefully expected a the and kind the our plugged full grew a is as as strategies tactics, by working of cases we and expected, up. should in at for with performed had quarter based We obviously see operationally, will both of than the try as QX. on quarter had And to slightly to performance. do continue even that supplies always and that model. mind, drive we of would variety what out boxes ways

Dion Weisler

Second was question time. margins around over

Cathie Lesjak

brought print the term, without Security the was at of the near to of In terms on in Analyst that billion this in to the in we print in about in we Samsung, term the be XX% be at half, about revenue to over in about is the net Meeting, rate. mean, XX% about And expect margins will it $X.XX short-term, long that that with think I what FYXX shorter the would And and Samsung a margins and over we time, Company. profit $X.X the Samsung, would talked investment there pressure expect mode. a for range. be next we to

So, XX% there get think range. the do will to be incremental over pressure. back But, margins those that to time we XX%

Dion Weisler

investors. the good rate And and to more NPV point our Jim’s the made the a time, sequentially model, ordinarily Katy of positive And Cathie for than many bring over reiterate deal down quarter did this we but that we business generates course question, slightly units just razorblade place returns was would. to units that

Operator

go question UBS. Please The with from next Steve Milunovich ahead. comes

Steve Milunovich

up there, a on units, was would consumer than the at units the I in out generally, Following but commercial on greater did that, more attach And least growth would rate. you higher commercial. have put think

those to bit fact in positive more that are skewed confidence a your what’s guess I if NPV So, consumer? be it’s going toward

Cathie Lesjak

a confidence. have lot of we Steve, So,

rate. attach portfolio, consumer home inkjet let what printers us getting space, in printers [ph] are of and they Our really and regularly phone particularly types know where those the strong

units where to also NPV of space most because bit a the opportunity in consumer we absolutely an sizing and on positive that’s little both place saw You’re market units. then the were right, incremental better

Steve Milunovich

year year? what a -- assume, hoping how what all the put together. It sitting you and we’re of here to now, it’s don’t then, are little we And to for a little accomplish supplies, I sounds hardware printer was grows, you of does, what up; look growth. business bit know flat in but like year achieve probably XX next if your what And should months? all a looking are growth we last stabilizing are Okay. to this I bit from next supplies for graphics priorities, about do for we the

Cathie Lesjak

I think Enrique said Security Meeting. best it Analyst the at

We’re up, really the and started focused growth XD don’t on AX we’re copier Dion across guide imagine. the to do space, if the and real accelerating revenue. is the to XX We supplies opportunities, plus just flat if But you that where done growth. I got is, if plus, think grow, XX% math, there actually opportunity we you’ve say, mean, we’ve initiatives math, you got getting can we’ve revenue space. it’s think as of in we slightly printing the that

Dion Weisler

around we’re for majority operating for then important to obviously of entire revenue next years around always years, really the XD to to of core an over across our provide vast graphics growth which today. the opportunities It Steve, service out into our business, business. it’s to generates over and the ten pillars growth cross we’re doing and long-term computing the three most for next future shareholders. opportunity growth two and a the our think five remember, us our the further crates is of printing, work I our profit initiatives executing will strategy, AX, is three everything which The

Operator

Please comes ahead. The with Deutsche go Sherri from question next Scribner Bank.

Sherri Scribner

we forward ask PC on into as the XXXX. question business to move want a fiscal I

the XXXX. compare I is Cathie, much think difficult mentioned in more you fiscal

drive bearish and guys the able have time to is the business next hard a help PC PC anticipating will what being grow think I Are the growing view growth? you business that will that year.

Dion Weisler

an at of start little still that of and I’ve one don’t; opportunity a consolidating; premium Cathie still than that We machines billion me in X.X-point grew got HP $XXX five that remind a market more it, everybody grew to that. to let us. long-term, sort for means five X.X%. top want is this in might four weigh the consistently on the represents Well, market logo that. said is four out I’d

the are creating. reviews back And for of are can much where the bigger the getting of transformation had, the ever think finding the we certainly, to innovation profitable we strong So, growing that positive four. And value in to and into off year-over-year topline saw gains, I’ll gains. is that where we continuous and topline quarter profit. operating market share again. strong we But We a saw paid the -- big I We remind innovation really sequential in share those yet everyone growth growth, four, heat We getting but business are not work. that consistently. all than rather channel lineup, an faster categories, was have control. objective of The and all this subcategories, all was off big incredibly we pill an It’s well-managed. no well the get is single was under outcome more magic of this There aged inventory inventory is regions. that’s

both kudos chains within team really the supply functions. the think I and business regionally the to units, the

market. I as go think good we compete this position to very we are in a forward in

Cathie Lesjak

XX% over traditional as a We’ve unit the how would and I Dion in and market you’ve Analyst perspective from cost that think, And laid about, we last to question can in great market. compares that do no tougher, now in make back we’ve hyper-segmentation we The that year-over-year, I we QX, QX QX. into we and innovation, grew that. structure that are win. we But, and Ron fact mean, playing know the compete XXXX got seen down the got are revenue Meeting to and grow XX% year, be XXXX. about and QX so XX% core Security reinvest we sure our in PC in a out talked at that game as XX%

are to how in operate to outgrow environment, there know tough we our So, competition. compares. this But and

Sherri Scribner

just a on And question then, Samsung.

some you mentioned also of think us billion to to clarify, you of year between half expect of you be below the supplies to would And XX% sense the how from do can think revenue the because XX% out operating and in X.X give margins, Can be hardware margin first range? then, units? you to that still that breaks dilution the I XX% or you in to the add. on just in XX% acquisition

Dion Weisler

that of that Why into reiterate specifically sort transaction, then new and don’t investors important some we’ve us, because talk and given those Cathie we’ve this can important come transaction I I and have why got numbers. I to recall stop, just closed was to the know, to think the it’s stock

primary First this print bought team new we And Samsung business we our our the of three all, reasons. for family. to for investors, welcome

technology customers. lower parts. disrupts to are Firstly, partners thousands to you with relative our copier the we very complex market they those for see traditional cost copiers ground. The Samsung Samsung you and break of this down for AX those parts, cost players increased hundreds have traditional operate translates would to on leadership. machines thousands underpenetrated you AX margins the where market machine, market break And were in that and/or per significantly is but machines, if The parts down, a strong less level billion operate the complex a -- to we market performance really the page that and of of the would AX were be very our $XX when would to market lowers

that portfolio now, the and reason and deployment extremely portfolio strong there’re in and would the technology tenders those out, services it, AX have an from of AX and managed that second come Samsung were really Ink, for AX both a excluded mixed in the capability, our which requirement deals. together HP a our and increases AX both AX customers we had often you AX PageWide, with that certain and technology in is AX when print in the put technology we integrated So, spaces Laser, the

Now being new team we is, opportunities increasingly than third industry-leading. inherited and capability opens actually having us. And AX to laser space, industry-leading have for full includes team engineers, thing, think a X,XXX the more is added very And we up than portfolio, this combined diverse patents core. I top a our AX, R&D now class incredible go-to-market in more X,XXX newly

the in AX or years. lot of at confidence our ability And three a share XX so with next of we that to points -- in least have XX% attract market

Cathie Lesjak

the as means business materially of And is laser. do they I to FYXX largely that in things has to that about revenue. lower then percentage their the bit AX been than obviously current of $X.X within that with of is quite to business, -- mix, percentage but low-end the that Samsung Samsung’s is our laser, keep run mind our has and that business. total a talked is of in they are which respect lower billion And terms print revenue And for some mostly a the supplies job is historically business improve

term, on short from of I’ll long the in In up the Samsung to actually over strong to but very We pressure or not margins. it drop term, margins, think do terms the whether XX%. there’s know that to back you we’ll math the business get below they leave you the good

Operator

comes The next ahead. question go from Sacconaghi Please Toni Bernstein. with

Toni Sacconaghi

wanted follow Samsung. up just I on to

off $X business billion, supplies and So, when the billion think were I a that was. you $X.X for Maybe maybe supplies speak the about $X.X it trailing follow-up, all hardware, a a like can billion that? next roll please. a I’ve what was for guiding that feels XX year. And shouldn’t you’re really tell dramatic you us quickly bought in to said given you business, and can And months decline you that

Cathie Lesjak

that in about we’ve But, the revenue and percentage business. materially that revenue Toni, the printing mix the for what run was of the terms a lower on of XXXX So, never that was was supplies, as they of does. HP Samsung percentage $X.X talked supplies than billion,

lost market low-end we AX the in So, share really typical by printing and keep bought so, the not disrupt not printing this announce declined a Laser is long and their bought talk really customers and and And the we’re we make revenues. space, And fact close, have AX again, period reason pretty what that’s AX that I -- choices. that a Right? the in But has uncertainty to the between copier there’s space. really it you when can’t business, Samsung why mostly mind Samsung lot of surprised is that. is to

Toni Sacconaghi

we’re rate supplies is your to from coming ever is know going really what if we organic know how really next Samsung. Just, to much need growth year,

reflection wouldn’t separate high-end be, it or in a year-over-year, up be it is to think if out out half? going first have question some why particularly then, not XXXX, declines and of which would done. question to DRAM of guys X% give the targeting the now, ASP rich pretty you you are I you my guess, that I the we in expect again just giving fiscal future? So, on follow-up are the And they in about ASPs; were going is PC

Cathie Lesjak

Okay.

Samsung, like In the doing and if is our are integrate and challenges job do we going printing of print fully to and optimizing things terms the we the going is right business, forward on go go-to-market to integrating a Samsung basis portfolio and with merge Samsung the with business are of R&D. be completely we we have absolutely one HP that

become what versus So, increasingly the printing is Printing was Samsung’s difficult it the to will HP for business. -- business break what out us

discuss basis. be you decide tell that challenge forward it’s talk and We about will go very supplies, what are the difficult. a a going not $X.X So the But, going of we a forward on can be or is billion. go to supplies to on basis, percentage whether

we the can, flat we you do or we will of whether supplies, that are view on Samsung. not slightly good be a so that will up give best to and can without expect we we We

Dion Weisler

remember the the is The the Toni thing revenue of is largest AX. of other that today portion to on still composition Samsung

an these AX assets, we still that investment was which the in acquired recall largely You’ll mode. capability so

more the market attraction. supplies more generally into higher the so, that business comes and transactional and contractual, as And AX to we with we shift move from the

of composition going is supplies the change. indeed time to over so And

Cathie Lesjak

a just question ASPs, things of why talked actions And decrease we result it costs stations. year-over-year kind material -- gaming terms shift you XXXX, a then, you and But, and your as of ASPs work ASPs then, is in ask repricing the in you in of said decrease, mix about did can premium, clarifying I as Toni, end took. that like big the that to that products, of higher being asked? And is You say piece what wouldn’t commodity in we -- from a expect the question? I is agree a up on pressures the the

Toni Sacconaghi

ASP I expect not would increase of the No, first sorry. I similar substantial you year a wasn’t was increases, I’m still particularly why and clear. of half level year-over-year? in saying the a

Cathie Lesjak

foreign So, have to ASPs has -- on the a the year-over-year And that’s is basis, much counterbalance we is competitive to ASPs going the prices there in gotten some the Systems. counter increase do of currency but think about terms we expect kind what pressure we’ve be could related the what environment that that decrease for where therefore the actually costs the to pressure significant that an stronger. talking currency there pressures commodity been in gotten pressures there currencies markets? will of And is to are in be, in downward local be Personal

Operator

question with comes Please The next Shannon go Cross ahead. from Cross Research.

Shannon Cross

I Samsung, then have one on follow-up another.

accretion, closing much So, or you with deal is three of I of operationally, synergy have integration? to had within Samsung, figure to thinking the the prior then, And there you sort regard I’m a trying out to penny how visibility in are ago? how much the follow-up. weeks the how And one about

Dion Weisler

Shannon. Thanks,

days up competitors were of we course, sort that ago. until Of XX

I tricky team days. of that our get learning had of it’s got this as the than And little our as still going those on we team doing integration customers, would so, of where indeed we into say, is every the a would capture XX the business. that in I But, lot terms would not best day the is very incredibly at things. there give we’re position this say, under just We acquisition a is leading are all more well; you expect a to early, to covers days around acquisition, how the looks can information today to The be somewhat we of opportunities closure. the right you into much that’s us industry will specifics too that. focused imagine, incredibly exactly practice that early synergies. But,

Shannon Cross

How then, I that gaming synergies your are making. incremental engaging Okay. maybe the PC you the you on of investment those utilizing or XD how guess, investments synergies, and level have or the initiative AX, And printing, per side of you other much you core the growing as about other side, sort some that growth simplify sort within doing? are of some to I as assume what the thinking on of then, costs you’re may reduce on be opportunities. business the return your would continuing and And the on isn’t

Dion Weisler

really stakes. actually it you’ve it’s well. focus on We summarized table think incredibly I Well, cost,

cost in be right to the position. have You

investments. If the position, right you’re the not you make don’t opportunity on to cost have

ahead As we of it believe value. can choices about relates us. investment we good shareholder We to feel investments, significant the create

trust couple identify Analyst Meeting, we��ve opportunities and I As years them in confidence our that Security we follow that course we one to execute business, we the would we can demonstrate that the we all process bank another. against of the outlined dropped across our over the at in $X to ability hope last is or that of have and $X that say execute. investment weigh investment thesis the we

surprise that we’re making. we that with advance investments that investments that make don’t We’re our to targeted so the we do strategy, anyone ensure very the

and profitable is very And lay We’re growth we all ultimately, the what sake it’s just not fascinating. for about Growth establishing particularly out. growth hitting disciplined that is milestones about. generating

Security every to partners at channel single developed, partners Deloitte at real the plus in Siemens, lower platform, Meeting the graphics premium segment unit was Cathie right ago now. Same region to year by is made we’re NPV nonexistent and true platform and those around the a positive about, are demonstrating for around are paying the I for investment in has choices, business that segment, are that placements than announcements XXXX. a we made materials that investments are we’ll in that units examples talked very XD that targeted from the look and gone we’ve and think that printing systems, announcements metals technology and XX that Analyst starting around more partners print. ecosystem business dividends materials of gaming and specifically making and today, we make that a in a the globe good color great technology XX broadly in cost investments

core, in growth we’re the future. areas to feeling we well our as ability about good So, the in execute outlined, the as that

Cathie Lesjak

and this you, investment then what back step We all And in very we to analysis. add based terms cash it not, will then, actually and the determine stack invest to going in. are the necessary Shannon, the just remind at whether opportunity and a what on flows that’s determine look is of is returns value rank is or to to we firm. go-forward also ones to And basis which

Operator

America Lynch. of question next from The go Bank Please Mohan with Merrill Wamsi is ahead.

Wamsi Mohan

I have question, Samsung then a follow-up. a

quite you that mix to Samsung relative to business So, intrinsically hardware is the said the relative core HP the business. of in think Cathie, different supplies I

$X.X the time the I right in billion, from would more hardware to $X.X a to assumption or billion you make. revenue shrinkage that’s Is the announced Now, that think less related.

so, that the mix alluding a and follow-up. something holds the are X.X true, level? that And as both have that X.X is to, I billion at And percentage you billion

Cathie Lesjak

the than in billion supplies business. So, revenue Wamsi, of $X.X for the yes, HP mix materially the is lower current

Wamsi Mohan

decline X.X that Cathie say from you hardware X.X would to related? But, the largely was

Cathie Lesjak

was for I obviously supplies as by led well. ramifications think hardware but had it it

Wamsi Mohan

I if could follow And up. Okay.

you much you some if your gaining how of of a how you Dion, market? could big great? points this many it was share are you of was sense driven could be growth Maybe in out in How share growth that’d XXXX PC total gaming, PC gaming the fiscal give driver On market, us growth? maybe of

Dion Weisler

the a this had not there the We within NBA. And has is growing. lifting segment how only but revenue on the we as particular a data I as share effect This I the are better segment over it that of well X than the redundant. premium want up think portion, these a well from grown material more months segment taken nothing gross people just has which that’s analysts in the it other much franchise; think incredible that And to to franchise; sizable the margin down that at terms is that brand, I for our tuning level. that wouldn’t every in we’ve as say overall And drives, to halo of a our XX at is business us it airier to I been is PC of last battlegrounds an it’s there would growing break don’t that business. as are game sources in space. make look

growth this in the we business being like see and we continuing. So,

Operator

last from The Markets. ahead. question Please go Amit Daryanani RBC Capital comes with

Amit Daryanani

guess, I sounds I with deal Perfect. Cathie, dilutive is Samsung like well. near-term. need it I start guess, to the question the as

Your is back Jan talked The that in gave and have to timeline what Could you quarter guys EPS you to Street guide the from XX% XX%, what’s dilution get this range quantify that numbers. the the asset core you Jan guys historically? EPS essentially IPG us bracking the about Samsung quarter margin

Cathie Lesjak

down So, are we Amit, Samsung going break of not in to that level quarter-by-quarter. detail

get second and EPS, we your I for bit the think of it’s Samsung. question? that suffice what part the covering of little headwind from was to for it are XXXX I’m $X.XX guide QX to And of say we our $X.XX sorry, non-GAAP with that absorbing

Amit Daryanani

that of more -- in part term much second that? line fiscal talked is sort asset what being Samsung to the longer XX%, or really core that, is was IPG to XXXX is about target longer than that a you’ve margins, The timeline term XX%

Cathie Lesjak

It but back over will to time, we’ll consistent pretty see take levels. years us some it get progress few to the those next

Dion Weisler

unconsolidated of asset servicing perspective. of we in money enables cost value that enables for very market this about our not clear Cathie. of proposition in invented to we and why mousetrap all I’m that is a engineers I reiterating a pay over really billion It’s share’s to just $XX we’re of why this and revenue we’ll copier revenue. that a the interesting, reasons partners per take pretty don’t lower And that with More from dividends asset. pretty And better is earn sake. fascinating different our It it’s page a think acquired we’re What’s the this whilst kind very AX worth getting with chase customers interested started more for that it’s disruptive X,XXX fascinating. buy incredible was us to not for incredibly space. this technology rich acquired on and We patents. time portfolio share a being a than as is team those

Amit Daryanani

operating And is up memory you right did if you have it a on I the down headwind on from I could revenue margins follow points; core just much could of up year-over-year, how us is now? double-digits. about PC tell mean, guys basis business, XX

basis? on just memory much So, trying been sense, dealing op get with you had to how margin

Cathie Lesjak

look at if total our $X Amit, was headwind a commodity year, costs billion. you the about So,

managing that about, looking -- And by a we’ve commodity industry-wide balance been tough done done actually in we’ve so, cost very Dion to we prices. at basically incremental assure strategic purchases not done strategic we think we’ve environment. that has negotiate better ourselves are talked leveraging of doing sheet, job of that a but really good assure longer supply our also only into ourselves entering -- buying what term of able some And agreements, to so I supply,

using in all We of repricing still you by in putting also of of then, our with have And sea as out kind sheet of and mitigated very then it figure and outgrow do those that kind we market the significantly all that on at more by the -- to market. balance competitive tactics when look all what we’re that product be able able coming be the we fact, and together. see, to

Dion Weisler

all. and I understand, is thank and been a want I opportunity you I with the have we’re that, So, between and a of to you turkey. it to season Thanksgiving, Americanized take

to want reinvention journey. I you course thank following of us the So, through for our

business us in our results trajectory forward. Our going the real confidence of give

new our remain in natural humble in investing and future. more the adjacencies been growth We at We’ve and leading and core We’re the markets, time competitive. we’re never markets entering focused. same

We’re been been Have dependable. all. great Thanksgiving. year started. open results great it’s a that getting that proud We of reinvention and delivering very transparent and the we’ve Thanks and and just of proud a we’re think we’re

Cathie Lesjak

Happy Thanksgiving.

Operator

presentation. is concluded. you Thank conference now The for today’s attending

You may disconnect. now

HP (HPQ) 21 Nov 172017 Q4 Earnings call transcript