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Hewlett-Packard President Meg Whitman Visits CNBC

Related: CNBC

WHITMAN: WELL, I’D SAY THERE ARE TWO PIECES OF HEWLETT-PACKARD. THERE IS THE PRINTING AND PC BUSINESS, WHICH THE PRINTING BUSINESS BY THE WAY, I THINK IS A FLAT BUSINESS. WE ARE SEEING ACTUALLY INCREASES IN ENTERPRISE PRINTING AND WE’VE GOT SOME VERY INTERESTING PRODUCTS COMING UP IN THE CONSUMER SPACE. THE PC BUSINESS IS A SLOW GROWTH TO DECLINING GROWTH BUSINESS BUT WE CALL THAT BUSINESS OUR PERSONAL SYSTEMS GROUP WE DON’T CALL IT THE PC BUSINESS AND WE ARE INTRODUCING TABLETS FOR THE CONSUMER AS WELL AS THE ENTERPRISE. WE ARE VERY EXCITED ABOUT ELITE PAD 900, WHICH IS THE FIRST TABLET WE’VE DESIGNED FOR ENTERPRISE. BUT THAT’S ONLY A PORTION OF OUR BUSINESS. 43% OF THE PROFITS OF OUR COMPANY NOW COME FROM WHAT WE CALL ENTERPRISE GROUP, WHICH IS OUR SERVER, STORAGE, NETWORKING, TECHNOLOGY SERVICES GROUP THAT IS DOING SOME VERY INTERESTING THINGS IN SOFTWARE DEFINED NETWORKING. OUR STORAGE BUSINESS IS GROWING DOUBLE DIGIT. OUR HYPER SCALE BUSINESS IN SERVERS IS GROWING VERY FAST AT ALBEIT LOWER MARGINS. SO WE’VE GOT A GROWTH PART OF THIS COMPANY AND THEN A PART THAT’S SLOWER GROWTH THAT WE ARE MANAGING FOR CASH AND THAT’S OK. YOU JUST HAVE TO BE SMART ABOUT HOW YOU MANAGE HP’s PORTFOLIO OF ASSETS AND I THINK AGAIN, WE’VE GOT SOME GREAT PRODUCTS COMING UP THAT I THINK WILL EVENTUALLY TURN THE REVENUE TRAJECTORY OF THE COMPANY AS A WHOLE.

FABER: BUT EVENTUALLY IS A LONG TIME MEG. IN THESE INTERVIEWS THAT WE’VE DONE EVERY QUARTER YOU HAVE MADE THE POINT THAT THIS IS GOING TO BE A LONG TURNAROUND. THREE YEARS, FOUR YEARS, PERHAPS EVEN FIVE YEARS. I WOULD ASSUME YOU STILL BELIEVE THAT’S THE CASE.

WHITMAN: I DO. WE ARE ONE YEAR INTO A FIVE YEAR JOURNEY. WE’VE SAID 2013 IS A FIX AND REBUILD YEAR AND THAT YOU WILL START TO SEE REVENUE GROW AGAIN IN 2014 AS OUR PRODUCTS HIT THE MARKET IN A REALLY MEANINGFUL WAY. WE’VE MADE SOME OF THOSE INVESTMENTS IN TERMS OF OUR ABILITY TO DO BUSINESS WITH THE CHANNEL, A REVAMP OF OUR GO TO MARKET. SO I THINK IN 2014 YOU WILL START TO SEE REVENUE GROWTH ON INTO 2015 AND 2016 BUT WE HAVE BEEN VERY CLEAR THAT THIS IS A JOURNEY. HP DIDN’T GET INTO THIS SITUATION OVER NIGHT, IT TOOK A WHILE AND IT IS GOING TO TAKE US A WHILE TO GET BACK. BUT I HAVE TO TELL YOU I FEEL GREAT ABOUT THE HP EMPLOYEE BASE. WE HAVE A VERY TALENTED GROUP OF FOLKS AND I FEEL GOOD ABOUT OUR PRODUCTS.

FABER: I KNOW MEG BUT HOW IS—I MEAN JUST IN TERMS OF THEIR MOOD RIGHT NOW, WATCHING A STOCK PRICE AT A 12 YEAR LOW A 22 BILLION DOLLAR MARKET VALUE ON THIS ICONIC COMPANY SEEMS HARD TO IMAGINE. I WOULD ASSUME THAT’S GOT TO BE AFFECTING MORALE AT THIS POINT. NOT TO MENTION THE FACT THAT YOU FIND FRAUD, MY WORD, NOT YOURS, AT A COMPANY YOU BOUGHT A LITTLE MORE THAN A YEAR AGO.

WHITMAN: SO LISTEN WE’VE BEEN INCREDIBLY TRANSPARENT IN OUR COMMUNICATIONS TO EMPLOYEES AND YES EMPLOYEES ARE VERY DISAPPOINTED ABOUT THE PERFORMANCE OF THE COMPANY. VERY DISAPPOINTED ABOUT THE STOCK PRICE. BUT THERE IS A COMMITMENT AND A RESILIENCE TO HP EMPLOYEES THAT I THINK THEY ARE GOING TO SEE US COME BACK HERE IN A VERY MEANINGFUL WAY AND IT IS NOT QUICK AND IN TODAY’S MARKET PEOPLE WANT A QUICK FIX. THERE IS NO QUICK FIX HERE. THERE IS NO SILVER BULLET. BUT I KNOW THAT WHEN YOU LINE UP 300,000 HP PEOPLE AGAINST A MISSION, I THINK WE ARE GOING TO DELIVER HERE AND I THINK PEOPLE WILL LOOK BACK AND BE SURPRISED BUT WE HAVE TO MANAGE EXPECTATIONS ABOUT HOW LONG THIS WILL TAKE. PART OF THE WAY HP GOT INTO TROUBLE IS SHORT-TERM FIXES THAT DIDN’T ACTUALLY LAY THE FOUNDATION FOR THE NEXT FIVE YEARS OF HP. AND YOU’VE GOT TO BUILD FOR THE FUTURE HERE. YEAH, COULD YOU PUMP UP EARNINGS FOR NEXT QUARTER OR NEXT YEAR? YOU SURE COULD, BUT IT WOULDN’T LAY THE FOUNDATION FOR WHAT WE MUST HAVE IN TERMS OF THE FOUNDATION TO BUILD THE NEXT GENERATION OF HP PRODUCTS.

MELISSA LEE: MEG, SOME CRITICS OUT THERE MIGHT SAY THAT INTRODUCING A TABLET NEXT SPRING IS NOT EXACTLY LAYING THE GROUND WORK FOR A FUTURE THAT’S FIVE YEARS OUT GIVEN THAT THE TABLET HAS EXISTED AND HAS ALREADY GAINED SO MUCH PENETRATION AMONG CONSUMERS. WHAT CAN YOU SAY ABOUT THE NEXT GENERATION OF PRODUCT, THE FUTURE PRODUCT, BEYOND THE TABLET NEXT SPRING, THAT HP HAS GOT IN THE WORKS?

WHITMAN: SO, WITH REGARD TO OUR PERSONAL SYSTEMS GROUP, WE’VE GOT TWO TABLETS – CONVERTIBLES, WHICH I THINK IS THE NEXT GENERATION FORM FACTOR. LISTEN, A LOT OF PEOPLE WANT TABLETS, BUT I KNOW MOST PEOPLE END UP CARRYING A LAPTOP PLUS A TABLET, PLUS A SMARTPHONE. SO WE CAN OBVIATE THAT NEED BY GIVING THEM A GREAT LAPTOP THAT IS ALSO A TABLET, WHICH IS WHAT OUR ENVY X2 PROVIDES. I’M EXCITED ABOUT THAT NEXT GENERATION OF FORM FACTOR. AND THEN WHAT YOU SEE IN JANUARY, IS OUR TABLET DESIGN FOR ENTERPRISE. THIS IS A TABLE THAT HAS A 10 AND A HALF HOUR BATTERY LIFE, WITH IT’S SMART JACKETS, IT’S GOT ANOTHER TEN AND A HALF HOUR BATTERY LIFE, IT IS BUILT FOR THE ENTERPRISE, YOU CAN SERVICE IT, YOU CAN TAKE OFF THE BACK AND CHANGE OUT THE MOTHERBOARD, AS WELL AS THE SCREEN AND IT HAS ALL THE SECURITY FEATURES THAT THE ENTERPRISE WANTS. AND WE ARE GOING TO CONTINUE TO BE INNOVATIVE ON OUR FORM FACTORS AND WHAT CONSUMERS, WHICH BY THE WAY, EMPLOYEES ARE CONSUMERS TOO, WHAT CONSUMERS AND EMPLOYEES WANT IN THEIR PERSONAL DEVICES. MY VIEW IS, THE NEED TO CREATE, CONSUME AND SHARE IS NOT DECLINING THAT IS ACTUALLY GROWING. THE NEED FOR COMPUTE IS GROWING AND WE’VE GOT TO HAVE THE RIGHT FORM FACTORS AND THE RIGHT PRODUCTS. I’LL TELL YOU, I AM EQUALLY EXCITED ABOUT THE ENTERPRISE SIDE OF OUR BUSINESS IN TERMS OF WHAT WE ARE DOING IN TERMS OF STORAGE AND NETWORKING.

FABER: MEG, FINALLY, I MEAN TO PUT IT BLUNTLY, CERTAINLY THE LAST FOURTEEN MONTHS OR SO THAT YOU HAVE BEEN RUNNING THIS COMPANY HAS NOT BEEN EASY. IS THIS THE WORST IT IS GOING TO GET? CAN YOU MAKE A PROMISE HERE TO INVESTORS PERHAPS, THAT YOU KNOW, NO MORE BOMBSHELLS IN TERMS OF ACCOUNTING AND NOTHING UNEXPECTED ON THE EARNINGS FRONT?

WHITMAN: LISTEN YOU KNOW, I KNOW WHAT I KNOW TODAY, AND I FEEL GOOD ABOUT HP’S POSITION. I FEEL GOOD ABOUT OUR PRODUCTS, I FEEL GOOD ABOUT HOW WE HAVE REORGANIZED OURSELVES, I FEEL GOOD ABOUT THE INVESTMENTS THAT WE ARE MAKING. BUT THIS IS A TURNAROUND, AND TURNAROUNDS CAN BE UNPREDICTABLE. AS I SIT HERE TODAY DAVID, I DON’T SEE ANYTHING ON THE HORIZON, I THINK WE’VE GOTTEN THE BAD NEWS BEHIND US, BUT IN A TURNAROUND, YOU NEVER KNOW EXACTLY WHAT IS COMING AT YOU. AND I’VE DONE A COUPLE OF TURNAROUNDS IN MY CAREER, AND YOU HAVE TO BE PREPARED FOR THE UNEXPECTED. AS I SAID, I DON’T SEE ANYTHING AS I SIT HERE TODAY, BUT WE ARE IN THE MIDDLE OF A TURNAROUND.

FABER: I WOULD ASSUME IN MID-MAY BEFORE YOU LEARNED OF THIS, YOU PROBABLY DIDN’T EXPECTED IT EITHER. IN TERMS OF THE AUTONOMY.

WHITMAN: I DID NOT.

FABER: DID YOU THINK AT THE TIME, WHAT DID I GET MYSELF INTO?

WHITMAN: YOU KNOW LISTEN, I KNEW I WAS GETTING MYSELF INTO A TURNAROUND, AND I DID IT BECAUSE I CARED ABOUT HEWLETT-PACKARD. I CARED WHAT HAPPENED TO THIS COMPANY. IT IS IMPORTANT TO THE TECHNOLOGY INDUSTRY, I WOULD ARGUE THAT IT IS IMPORTANT TO EVERY COMMUNITY IN WHICH WE DO BUSINESS. AND I’M PROUD TO LEAD THIS GREAT COMPANY. WE ARE GOING TO BRING THIS COMPANY BACK, WE’VE GOT DEDICATED EMPLOYEES, BUT IT IS A REAL CHALLENGE. I HAVE TO SAY. AND USUALLY THINGS THAT ARE WORTH DOING ARE A CHALLENGE, AND THIS CERTAINLY IS ONE.

FABER: AND TO THOSE WHO RAISE THE CRY YET AGAIN THAT THEY SHOULD BREAK IT UP – IT’S TIME TO JUST RETURN WHATEVER VALUE IS LEFT IN THIS COMPANY TO SHAREHOLDERS, WHAT WOULD YOU SAY?

WHITMAN: I WOULD SAY THAT I BELIEVE THAT THE PARTS OF HP ARE BETTER TOGETHER. IF WE MANAGE OUR PORTFOLIO OF ASSETS – PRINTING, PCS, SERVER STORAGE AND NETWORK – WE ARE VERY CONSCIOUS ABOUT INVESTING APPROPRIATELY FOR THE RIGHT RETURN ON INVESTED CAPITAL, WE MANAGED SOME BUSINESSES FOR LOWER GROWTH IN CASH, SOME BUSINESSES FOR GROWTH, THEN THAT’S VERY RESPONSIBLE. THERE ARE GO TO MARKET SYNERGIES, THERE’S SUPPLY CHAIN SYNERGIES, AND SO I FEEL THAT THIS IS THE RIGHT STRATEGY TO KEEP THIS BUSINESS TOGETHER. AND MY VIEW IS, WE WILL SEE THE RESULTS OF THAT IN 2014.

FABER: ALRIGHT, WELL WE WILL SEE YOU I’M SURE BEFORE THEN. WE ALWAYS APPRECIATE THE FACT THAT YOU ARE WILLING TO COME ON. MEG, THANK YOU AGAIN, AS ALWAYS.

WHITMAN: THANK YOU.


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