HP CEO talks 'strong' Q1 earnings report, coronavirus headwinds

you said you laid out some very

aggressive targets I didn't know you

could hit them because I was concerned

that the PC market may be in decline you

blew them away how are you able to do

that and also have that cash generation

that would allow you have such a big

buyback first let me thank you for the

opportunity of being here for the last

four months I have been really looking

for this opportunity so I'm extremely

thankful thankful and as you see as you

said we had a very strong q1 it shows

that the company is strong and is

getting stronger we executed extremely

well we grew ApS by more than 25%

we grew operating profit by 15% we

executed on strategy in the printer

space but we really did incredibly

incredibly well in the personal

assistant space we have an execution

machine we grow revenue we really grow

our share in the premium categories we

really had a very strong quarter okay

now you're talking it's sixteen billion

dollar capital return plan you're

talking advancing fifteen billion

dollars and total share our purchase

including eight points already

that's almost half the company how can

you afford to do that we have a very

strong balance sheet and what we have

decided is that we want to use our

balance sheet in the benefit of HP's

shareholders we are gonna change our

depth ratio to make sure that we can

increase that and return and buy back

eight billion dollars of stock in the

next 12 months and by changing also the

increase in the amount of capital we

will return every quarter we will be

delivering the 16 billion dollars that

we said you talking about a much higher

earnings number 325 to 365 and fiscal

2022 that does value your company is one

of the most inexpensive in the S&P 500

why do you think it trades at such a

discount well our focus is really

dreaming creating value this increase is

driven by operational improvements where

we're going to increase operating profit

in the next years by more than six

hundred million dollars and also the

aggressive use of our capital is going

to help to increase EPS during that

period so this is really going to be

what will be helping us to drag this

chip work further the shell helpfully

vice-chairman review board has told me

over and over again you will do what

in order to create the best value for

shareholders which includes in this

particular case not succumbing basically

to a odd bid from Xerox why does your

board feel that you should get that

chance to continue a British company

Bitesize well we we think that the offer

from Xerox clearly doesn't benefit HP

shareholders they exchange the value

exchange they're proposing the same

accents they are valuing themselves and

9 we are valuable valuable 7 the capital

structure they are proposing creates

significant risk they are proposing that

will be the ratio above 4% which will be

the highest in the SMP and on top of the

ICSP was natural and especially in

situations where economy could go down

we were talking before about coronavirus

imagine what will be the impact on that

in a situation where your debt is beyond

what it should be what the businesses

will be able to support well you mention

that I mean frankly when I think about

the pandemic I think about my job I

don't want to be the person who said you

know what that takeover made a lot of

sense at the absolute top which is

entirely what could happen the goal that

these people are showing makes me feel

that there's somewhat desperate I don't

know whether you agree with me but this

is the kind of thing that you look back

and say I cannot believe some company

was that darn fool wholly

take down all that debt to do this well

my tool stream we are competing in some

parts of the market in a relatively

small part of our company and we are

very much less than 10% the part where

we overlap we have grown 60 percent in

the last eight years they have declined

double-digit this shows you the momentum

we have and why we are winning in the

market so then why do you think I mean

that book they've got a board that

they've got some people that they want

to put on they do have support there's

some big institutions that are saying

this makes a ton of sense how do you win

them over if they're just trying to make

a quick buck

well actually what we are saying is that

there is value in consolidation within

that the synergies will create value for

our shareholders but it needs to be done

in the right way within their proposal

the same extent but in addition to

execute our to executing our plan within

this is something that we're open to

consider but we have explained

I think that's important because there

was a time when your company was

interested in combining with them and it

didn't work their company I think

essentially got worse

although the stock went up because

people expect you to buy them is there

as much value there's when HP looked at

it a few years ago well what we think is

there is value in consolidation in the

market because there are synergies to be

to be achieved those synergies will

create value we have some questions

about the performance of the company

that we need to validate before we go

and we'll make a potential offer it's

just the time deliver a big knowing that

whatever could happen in Europe will you

have a lot of business in the United

States with coronavirus to me it seems I

would say ill-advised at this point

clearly we think that the death rate

they are proposing is beyond what a

company in the situation where we are

and also given the businesses that we

manage we will be able to support we

have a negative cash conversion cycle

imagine what will be the impact on that

debt in a situation where demand may

slow down price of something like or

another before I came Jim Mitchell I

would say it's one of the more stupid

things ever it's the kind of thing it's

very embarrassing it's some clown banks

we check off on a private come more of a

diplomat let me ask you a question you

want our men of the world how are we

doing on the scroll of iris world water

you concerned actually we the way we

look at this is within the coronavirus

is going to have temporary impact the

basis of your business but we all use

this well the major impact on our side

is in the manufacturing side we produce

most of our products in China we have

been after Chinese New Year production

has slowed down we are seen a recovery

and the way we look into this is a

temporary impact during today how many

of your family the factories that

supplied to this world of today majority

of the factories are open but the

production is not at a hundred percent

level so you are not being able to meet

the babies I know your domain is

incredibly strong score so from a demand

perspective we don't see any impact he

saw a supply chain driven in parts for

the world we calculated and we have

estimated that in q2 this will have an

eight cents impact in EPS and this is

what we have built in our execution so I

want to do a very fine people

I want to leave her up it could be the

top I always welcome to hear something

like that because I am a person of

open-mindedness don't miss a second of

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