Creating ‘More Agile’ HP Will Be Top Priority of Incoming CEO, He Tells Investors
Though Thursday’s announcement that HP President-CEO Dion Weisler will depart to tend to a “family health matter” (see 1908220066) surprised many, he gave strong clues on a fiscal Q3 call Thursday that his decision to leave was in the works for an extended time. Enrique Lores, president of HP’s imaging, printing and solutions, will become CEO when Weisler steps down in November.
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The board picked Lores as Weisler’s successor “after a thorough review and careful consideration of a full bench of external and internal candidates,” said Weisler. “I rest easy knowing that the company I love is in the best of hands with Enrique as the next CEO.” Investors apparently weren't so sure. The stock closed 5.9 percent lower Friday at $17.81. HP didn't comment on how long the board's CEO search process took or when Weisler told the board he was leaving.
Priority 1 for Lores will be “simplifying” HP’s “operating model” by “driving significant improvement in our cost structure,” said the incoming CEO on Thursday’s call. “Our end objective is to create a more digitally enabled customer-centric organization.” HP’s customers are “rapidly changing,” and the company must adapt by becoming a “more agile organization,” he said.
HP raised its earnings-per-share guidance for the fiscal year ending Oct. 31 to between $2.18 and $2.22, from $2.14 to $2.21 in its May forecast. “We continue to expect a headwind from currency,” and in HP’s Personal Systems group, “we expect the pricing environment to be competitive,” said Chief Financial Officer Steve Fieler. “We remain prudent and balancing our current view of the risks and opportunities.”
Personal Systems will continue to be “a CPU-constrained environment across certain products,” said Fieler. The forecast assumes “the incremental China tariffs on notebooks do not happen” in HP’s fiscal Q4 ending in October, “according to the existing plan of record,” he said. “But importantly for the guidance, we're expecting a dynamic and competitive pricing environment with some of the supply chain costs and benefits we had in Q3 softening as we enter into Q4.” The Trump administration deferred to Dec. 15 putting the 10 percent List 4 Section 301 tariffs into effect on laptops (see 1908130028).