All right, we're keeping a close eye on shares of HPE after better-than-expected earnings. Let's bring in HPE CEO Antonio Neri. Um look, we were here, I was in the seat, I think you were in that seat three months ago talking about challenges in the server business. Has this business, did it bottom in the most recent quarter?

It did. It did. But look, Brian, we had a very solid quarter. In fact, we delivered above our commitments for the quarter, including the server business which we provided a guide that ultimately our results came at the very high end of that guide, both on revenue, operating profit, and operating margins. But what I'm really pleased is the fact that we took swift, targeted, and aggressive actions to address the three challenges we discussed last quarter in the server business. But this was our fifth consecutive quarter of year-over-year revenue growth across the company and every product business: in Intelligent Edge, in Networking, hybrid cloud, particularly true storage and GreenLake and private cloud, and then server growth revenues. And then, we also expanded profitability in hybrid cloud, HP Financial Services, and Intelligent Edge. And we are on track to deliver the server operating margins back to 10% by the exit of Q4. So, all in all, strong performance. And because of the momentum we saw in Q2, the line of sight we have for the second half, the bigger pipeline we exited Q2, we are raising our bottom range of that EPS guidance, the non-GAAP EPS guidance by eight cents.

The margins, the operating margins in the server business, down year over year, down sequentially, or quarter over quarter, in the trenches here, what are your teams seeing? What has been making it so challenging in that server market?

Well, first of all, like I said, we delivered better than expected. Although we guided down quarter over quarter, and like I said, it will take two to three quarters to get back to that 10%. But it's a combination of things, right? One is what we discussed last quarter with some inventory issues that we had that we had to take care of it, aggressive discounting. But ultimately, it comes down to the mix of the business with AI. And that's why we take a very disciplined approach across the AI ecosystem, if you will. And what I'm really pleased in AI is that this quarter, one-third of our orders came from enterprise, which tend to come with higher margin because there is more software and services attached to that enterprise market. Then you have to pay attention also to working capital. Working capital is very important because in some of these deals, you are deploying a significant amount of capital and there is a time between the capital deployment and the revenue profit recognition. So that's why, it is a technology transition, there is a business transition, and then there's a working capital transition. But I'm pleased with the progress we made in Q2. Definitely was the lowest and although better than we anticipated, and we have our way path back to where we need to be.

When I talked to Enrique Lores, who you know, of course, Antonio, he is the CEO of HP. They reported earnings, disappointing quarter from them, sounded cautious on the outlook. Maybe enterprise consumers or businesses are holding back demand or orders because of everything going on in the economy. Heard the same vibe from your competitor over at Dell in the server market. Have you started to see concern from your customers, those business customers, about placing orders given everything that's going on in the world?

Well, look, because of a unique portfolio, and we have a very comprehensive portfolio between Networking, and we are excited to see the transaction with Juniper come to a close very soon, and then, you know, the hybrid cloud with GreenLake. Look, GreenLake grew 47% year-over-year driven by the stickiness of that experience through storage and private cloud and all the ancillary services, and then our server business, which is a very large business. We have actually ability to mitigate ups and downs, but I will tell you that the demand during the quarter was steady. Although it was uneven in through the weeks because of the tariff churn that we went through. But month three was very solid month, and like I stated, our pipeline was higher in Q2 than it was in Q1. And so from my vantage point, customers continue to invest in IT. They all realize without IT, you can't compete in any industry you are in. And so that's why I'm more optimistic than just thinking PCs or printers or anything else. We play in the right markets, and we are capturing some of these inflection points we see.

Last time I talked to Antonio, you announced a workforce reduction, 5%, 350 million potential cost savings, but on that earnings call last night, I heard a more, maybe more aggressive HPE than I thought. Are you going to go deeper or beyond 350 million in cost savings?

Look, our goal is to accelerate growth while we drive structural cost savings, right? We are not only reducing costs but rethinking how we become more agile in the way we operate. So we are on track to achieve our overall 350 million cost savings by the 2026 fiscal year. We made significant progress and we expect that will contribute to the future results. Obviously, actions impact our employees, our team members, and we don't take those lightly. But the reality is that we are focused on anything that will drive operational efficiencies across the company. So aspect of that may be portfolio rationalization, but in the end, it's about process simplification and automation. And look, I think we spoke before, the fact that we have more than 250 use cases where we are doing POCs or already deploying AI. In fact, more than 40 are already in production. And we see the benefits of that across finance, global operations, marketing, as well as services. So that's why we believe there is an opportunity to accelerate that improvement, not just by reducing the workforce, but really becoming nimbler and better at everything we do.

You mentioned Juniper, Antonio. That trial begins, I believe, in July, and I've been following this with you every step of the way ever since you announced this transaction. You remain confident you can get this deal done this year. Are there concessions you're willing to make to the administration to get this done? And if so, what are they?

Well, look, the trial will start on July 9th, and we believe it's going to last only one to two weeks. That was the direction of the judge. So that's why we are now closer and closer to that timeline. And then the judge may take, you know, two to six weeks to issue the opinion, but that's the court process. And nothing has changed in our confidence to get the deal done. As we said many, many times, we believe the DOJ, this is flawed, the narrow the market in ways that really is not right. And secondly, it's not the reality, by the way. You know, in the United States, when you think about the Wi-Fi, the wireless market, there is at least eight competitors that they all play in every segment of the market. And then, you know, through the documents we have access, we believe we have the right to win this case. But you know, we obviously talk to the DOJ on an ongoing basis, but if they come forward with something that makes sense in terms of a proposal for settlement, that does not change the thesis of the deal and the return to our shareholders, we will consider it. But right now, we haven't seen that.

Coming out of this quarter, Antonio, and this, I was surprised by this number, we're just crunching the math, almost 12 billion dollars in cash on your balance sheet. That's about 50% of your market cap. If this Juniper deal does not go through, what's your next course of action to drive shareholder value?

Well, look, Brian, the reason why we have that balance sheet is because we are ready to pay for the Juniper deal. And as you recall, I stated that the Juniper deal is not only the fastest way to generate shareholder value, but we are committed to deliver at least 450 million dollars of synergies, which pays for more than the deal itself. So this is a no-brainer from a financial architecture perspective. From a technology perspective, this is totally complementary to our Aruba Networking and the rest of the HPE portfolio, which will allow us to provide a modern, secure AI networking set of product and services. And outside the United States, it's to compete with other vendors, including Huawei, which obviously, they have a larger share because they are not allowed to play in the United States. So from an investor perspective, it's a great deal. From a customer standpoint, it's a great set of technology and talent that we can integrate. But look, we looked at multiple alternatives with our board, it's our fiduciary duty, how we accelerate value, and we landed on this one. But if this doesn't happen, which would be incredibly disappointing, then obviously, we're going to discuss what is coming next, and there is a number of scenarios, including capital return and the like. But we are not prepared to discuss those at this point in time because our focus is closing this transaction and going through the trial.

Since we last spoke, Antonio, Elliott Management, of course, a feared activist investor, has reportedly taken a 1.5 billion dollar stake in HPE. Have you been able to meet with them yet to hear what they had in mind or suggesting for your company?

Well, Brian, HPE and our board maintain an ongoing dialogue with shareholders, and that has to do with a range of issues, and we always value their constructive input. We don't comment on specific communications that we have had with our shareholders. But as you can imagine, our board is very engaged. But I don't speculate on anything at this point in time.

Is an activist helpful or hurtful to what you're trying to do in terms of transform HPE?

Look, we welcome all the ideas, you know? And if there are really ideas that we haven't considered in the past, of course, we welcome them. And that's why we always approach every conversation from a constructive standpoint. Look, we have very smart investors, and Elliott, of course, is one of the smartest out there. So we approach this in a constructive way. And so if they have ideas that will accelerate the strategy and the value we are focused on, of course, we'll consider.

All right, we'll leave it there for now. HPE CEO Antonio Neri, always good to see you. We'll talk to you soon.

Thank you, Brian.