Mike Cadiz

Mike Cadiz sought additional details on the yields and reliability of Western Digital's products, particularly concerning multiple rollouts, and their implications for cost per bit declines. He also inquired about the progress and leverage of the Rochester test and integration site in accelerating customer transitions.

Answer

CEO Irving Tan confirmed ePMR product yields are consistently in the low 90s% range, with strong customer feedback on reliability and quality, evidenced by over 3.5 million units shipped last quarter. He stated that improving yields and increasing UltraSMR mix contribute to cost per bit declines. Regarding the Rochester site, he announced that HAMR qualification started this month (pulled forward from 1H CY2026) with one hyperscale customer, and next-generation ePMR qualification also commenced, with the Rochester lab playing a critical role in ensuring smooth, quick qualification and production reliability.

Mike Cadiz asked for details on the yields and reliability of Western Digital's ePMR products and their implications for cost per bit declines. He also inquired about the progress and leverage of the Rochester test and integration site in accelerating customer transitions.

Answer

Irving Tan, CEO, confirmed ePMR product yields are in the low 90s%, with positive customer feedback on reliability and quality, evidenced by over 3.5 million units delivered last quarter. He noted that higher yields and increased UltraSMR mix contribute to cost per bit declines. Regarding the Rochester site, he stated that HAMR qualification was pulled forward and started this month with one hyperscale customer, with next-generation ePMR qualification also underway, emphasizing the lab's critical role in smooth and quick qualifications.

Mike Cadiz asked how tariffs and elevated commodity costs have affected the expected trajectory of AIPC penetration towards 50% in coming years, given HP's current 25-30% penetration. He also inquired about customer and market reception to HP's pricing actions in both PC and print, noting any differences between consumer and commercial segments and how HP balances this with maintaining margins and share.

Answer

CEO Enrique Lores remained optimistic about AIPC penetration, which is currently above 30%, driven by value and application readiness, and noted HP's internal deployment showed up to 17% productivity improvement. Regarding pricing, he explained that print price actions in commercial led to some Q4 share loss due to competitors' Yen advantage, but not in consumer print or supplies (where share grew). PC price increases were smaller due to less tariff impact, resulting in less strong market reaction. CFO Karen Parkhill added that HP maintained strong revenue performance despite the pricing environment.

Mike Cadiz asked how tariffs and elevated commodity costs might affect the expected trajectory of AI PC penetration towards the 50% target, despite HP hitting 25-30% ahead of schedule. He also inquired about customer and market reception to HP's pricing actions in both PC and Print, differentiating between consumer and commercial segments, and how HP balances margin maintenance with market share.

Answer

Enrique Lores, CEO, remained optimistic about AI PC penetration, stating HP would prioritize premium categories while managing memory. He highlighted the value proposition of AI PCs, collaborations with software companies (Microsoft, Adobe, Rakuten), and internal HP deployments showing up to 17% productivity improvement as key drivers. Regarding pricing, Mr. Lores noted that in Print, commercial pricing actions led to some share loss due to competitors' Yen advantage, but not in consumer or supplies (where share grew). In PCs, price increases were smaller due to less tariff impact, resulting in a less strong market reaction. Karen Parkhill, CFO, added that HP maintained strong revenue performance despite the pricing environment.

Mike Cadiz from Citigroup asked for HP's view on the PC industry's 2025 growth rate and whether high-single-digit revenue growth for HP's PC business was a fair assumption. He also asked for a characterization of demand across different PC segments.

Answer

CEO Enrique Lores confirmed HP's projection for mid-single-digit market unit growth, aligning with analyst views. He agreed that high-single-digit revenue growth for HP's PC business was a reasonable expectation, given outperformance and positive pricing. He characterized demand as seeing growth in consumer and commercial, with commercial strength in government, enterprise, and SMB, offset by a decline in education.