♪ emily: she took ebay from a 30 person startup to multi-billion-dollar powerhouse. then ran a hard, expensive race for california governor and lost. now, meg whitman faces what may be her most ambitious challenge yet, turning around struggling icon hewlett-packard. her solution, to split the company in two. perhaps the biggest seperation in the history of american business. joining me today on "studio 1.0", hp ceo and chairman, meg whitman. thank you so much for joining us. it is really an honor to be here with you. so thank you so much. meg: you are welcome. i am glad to be here. i am an admirer of your show. emily: thank you. we are at "hp discover."

this is your annual tech conference and this is your last "discover" as one hp. is it a little bittersweet for you? meg: it is a little bittersweet because this company has been together for so many years. but i have confidence that this is the right thing to do because our markets are changing at lightning speed. frankly, these are two different businesses. it will allow us to be more agile, more focused, more responsive to customers. it is a landmark, it is a moment in history, but i am really optimistic about the future. emily: what do you think the biggest challenge is going to be of being two separate companies? meg: first is we have to get to being two separate companies. and this is an enormous

undertaking. this is the biggest separation that has ever occured, as far as i know, in american business. then once we get there, you know, we have to launch the two companies successfully with two new leadership teams, with two new boards of directors. in many ways, clean sheeting two new fortune 50 companies. but i think we are well set up. you know, you never know until you actually get there, but i feel like we have done everything in our power to get this done right. emily: when did you start seeing the split as the right choice? meg: i joined almost 3 1/2 years ago -- actually almost four in september. the first thing i did was to say we would not spin the pc division.

i don't know if you remember that. my predecessor had said we should spin pcs. not printers, just pcs. my first decision was to decide if it was a good idea or not, and i decided it was not a good idea. because i thought the company needed to bed down and get organized and have continuity of leadership and get the right strategy and really invest in r&d. i look back now, and even if we wanted to at that time, i am not sure we could have pulled off the separation. we embarked on the five-year turnaround journey and made a lot of progress and repaired the balance sheet. i said to the board, late last spring, i said, ok, how do we accelerate this turnaround? after many board meetings, a lot of discussion with the senior leadership team, we said it makes sense to actually separate the two companies so we can be more focused and agile and frankly have a capital structure that is right for the markets that these two companies will pursue.

emily: was it difficult to convince them? was it difficult to get certain executives or boards on board? meg: it is a journey that you go through. you surface the idea, you talk about it, you run different scenarios. you have another meeting. and the board was fantastic. they did exactly what boards are supposed to do. they questioned, they asked for more data. but it was a very interactive process and we brought everyone along together to the right place. emily: you know obviously michael dell saw something in taking dell private. others said you could have broken up the company even more. did you consider all the possible scenarios?

meg: we considered -- yeah, we considered a lot of different scenarios but we decided we wanted to continue to be a public company because we wanted our shareholders to get a chance to have that shareholder value creation. you might recall our stock price got as low as $11 or $12. we built the company back up and our shareholders and frankly our employees got to share in that in that value creation. i think that will happen again here. at least over the longer term. emily: you are going to become the ceo of hewlett-packard enterprise. meg: yeah. emily: and i am curious how you came to that decision because it is a more diverse but also more unpredictable set of businesses.

hp inc. plays a bit more to your consumer strength. how did you make that decision? was it like picking a favorite child? meg: part of this decision is who is in what spot and who do you have on the team that can step up? and my view was -- dion weisler was an incredibly talented executive. he spent many, many years in the pc business, he had learned the print business. i admire dion a lot. and i thought he would be perfect for hp inc. and then i thought that i love the enterprise business and it has not been what i have done for 25 years, but i now know the business and i love the business and i love the dynamic nature of it. and for management continuity -- i mean, what ailed hp a number of years ago was management turnover, too much management turnover. emily: you are going to be

chairman of hp inc. how does that work in practice? say hp inc. wants to do a deal with emc or some other company. meg: what we have said is that we did not create these two companies to compete with each other. we created these companies to go after new opportunities that only they can pursue. so at least for some period of time we have well-defined swim lanes.

♪ emily: top line revenue has declined year-over-year for the last 15 quarters. when does hp get back to growth? and how and where do you see most of the growth coming from? meg: so we have made progress on this dimension from, you know, high single-digit declines to flat to down 1%. which is not what we aspire to, but it is such an improvement over four years ago. i would hope that over the next year or two we would be able to demonstrate that revenue growth. now of course, we will be two different companies so it will be a little harder to measure. but listen, we have to be able to grow these two companies. because you cannot cut your way to greatness. you have to be able to grow. so that is the objective of both

companies. but listen, on the hewlett-packard enterprise, we are excited about converged infrastructure, we are very excited about software defined data center and our services business. emily: is that where you see the growth coming from? meg: i do. and our software portfolio. on the hp inc. side, we are excited about 3-d print. is it at its most nascent stage. boy, this could be a big business. we are excited about immersive computing. and actually excited about our core print business. because often people say that print is dead. no, no, no, print is not dead. people are not printing at home as much but, i do not know about your office, but everyone is still printing. emily: oh, yeah. i am still printing, for sure. it is interesting you mentioned software. we are seeing a lot of companies turning to software to grow their bottom line. apple and ibm are making a huge push into the enterprise. how do you compete with that and what are you doing in the software portfolio at hp? meg: well, ours is more, if you will, system software, software that helps run your data center. emily: you do not see them -- apple and ibm as a competitor? meg: ibm, yes, in many cases. apple a little bit different.

apple is more about the devices in the enterprise, and they would very much like to go into the enterprise, and we obviously need to defend. more on the hp inc. side, but we need to defend. as you migrate -- say you are a cio. as you migrate infrastructure into the next generation that will be required for you to be cheaper and faster and more nimble, the ability to write applications in a new environment, cloud native and mobile, it is going to be important for you to have orchestration, monitoring software. everything has to be automated today.

and so we have those kinds of opportunities in our software portfolio. so we play in quite specific areas of software that is a little different than, you know, erp systems, like an oracle or s.a.p. or salesforce. this is not really our market. emily: what about the cloud? what is the hp strategy when it comes to the public cloud? are you going to be a cloud, or sell to the cloud? and do you plan to take on amazon and google? emily: so our public cloud offering is really not designed to compete with azure or aws or google. what we see most enterprises wanting to do is not to put everything in a public cloud. so if you want only convenience, you might go to a public cloud, but if you want security, you want to be in a private cloud. and so our strategy is hybrid cloud. your cloud, the way that is right for your company and your industry. emily: there has been a lot of deals happening -- avago, broadcom, intel, altera. do you see a segment broadly at hp that could be transformed by m&a? meg: yeah, yeah. i think why you're seeing a bit of -- quite a bit of increase in m&a activity is our industry is changing.

you know, about every 10 or 15 years in technology i see tectonic plate shifts. web 1.0 to now -- mobility and web services, we are on the cusp of another enormous change and when that happens the industry rearranges itself. and i think that is what you are seeing. so we are back in the m&a game now that we have repaired our balance sheet. so we will augment our core innovation that we do internally, what we call organic innovation with m&a, but we want to be smart about it. emily: you mentioned tectonic shifts. do you think we will see more consolidation? meg: i do think you will see consolidation. that is what happens when industries get disrupted and dislocated. i can't tell you how that will play out, but i am not entirely surprised at some of the m&a in recent weeks.

emily: any sectors you can point out where you think it will happen? meg: i think there are two kinds of m&a. one is, as you pointed out, consolidation of big, existing players. but also all of the new startups that are coming up, that are either going to go public and be great independent standalone companies or become a part of bigger companies. we need to be watching and thinking about what the right thing for us is in both of those areas. emily: what do you think about valuations? i mean, do things seem expensive to you right now? meg: so certainly in the startup environment in silicon valley it seems expensive to me, but i will say if you find a company that is completely disruptive and has a chance to take big share from an incumbant, the valuations might be worth it. but we are quite disciplined buyers. we understand that acquisitions for the most part need to be accretive and we have to be responsible to our shareholders. emily: marc andreessen is the guy who got you into this situation in the first place. do you consult with marc andreessen about startups?

meg: he has been a great counselor to me and the company and he still sits on the hp board and provides a tremendous perspective. marc and a couple of other board members have fingers on what is going on in the valley. and we are fortunate to be there, because we see what is going on. emily: are you glad you took him up on the offer? meg: i am glad. there were a few days when i said, "marc, you know, what were you thinking?" it has been a really tremendous experience, and a privilege in many ways. i think it matters what happens to these storied companies, these great american icons, what happens to hp in silicon valley, it matters to california. i would argue it matters to the united states and to the world. so we have such a big footprint that we matter to communities around the world and i think that is a responsibility we have to take very seriously. emily: we talked about a billion dollars in restructuring costs, an additional $2 billion potentially in the services area. when does cost cutting end and restructuring end? this is a company that has been restructuring for many years, before you got here. meg: we have come a long way to getting the cost structure in line with our revenue trajectory, but nothing is worse

for companies than having an uncompetitive cost structure because then you do not win deals. you are in a downward cycle. you have a cost structure that is too high, so you do not win deals and you have to keep shrinking. emily: do you think in 2018 it will end? meg: so, you know, it is hard for me to predict. i think we have got the next three years mapped out well but it is a dynamic industry. i think when industry is changing as fast as ours, it is really hard to make predictions. emily: when it comes to jobs, job have been cut, 55,000 jobs have been cut. can you give us an idea of how many more there will be? i know you have said there will be more down the pike. meg: we are not entirely sure because it will depend on how these two companies do as separate companies.

but there will be some more restructuring costs as we continue to be effective and lean and competitive on the world stage. what i know is that, if we do not get our cost structure right, this will not be the happy ending that we all know it can be. so we make the tough decisions and we do it in the best possible way that we can. it is the hardest thing that i do as a ceo, but i have to have the good of the company and our customers in mind as we make these decisions. emily: do you see job creation as a part of this strategy? meg: so it is interesting, yes, because we are shedding jobs in some places but hiring in others. we are hiring in cloud, we are hiring in empowering data-driven enterprise, we are hiring in security. emily: how much time have you spent with satya nadella? and do you see more opportunities to work closely with microsoft?

meg: he has done a wonderful job and we have quite a close relationship with them. i think it was announced yesterday that we won their 2015 partner of the year award. so we are really proud of that.

♪ emily: do you find it troubling that there are still so few women in silicon valley and especially in leadership positions? meg: i think we can always do better. if i take industry as a whole -- and tech is a little bit behind here but my class at princeton had, you know, less than 20% women and the same was true at harvard, they are now 50% women. so part of this is simply generational. but part of this is making sure that women know that they can have a great career and have a family and do some other things. technology is a little bit more slow and i would say there are a couple of reasons why. it goes back to we have to get girls interested in science, technology, engineering, and math. emily: is there anything in particular that you have done at hp or you have done at hp and ebay before where you tried to address these issues? meg: first of all, we really work hard to make sure that we get a diverse group of entering

employees. listen, we just had to build two new boards. we needed to make sure that these boards were diverse. and what i will tell you is unless you work at it, it does not happen. emily: what advice do you have in terms of overcoming the toughest obstacles that you faced? meg: i think first of all, you have to have confidence in yourself. and you have to find something you love to do. listen, i lost a very well publicized race for governor. you know, really painful, but i picked myself up and dusted myself off and had a chance to run one of the great companies. emily: you have talked about the strong dollar has hurt hp and other businesses that are big abroad. should there be a policy response to this? would hp consider a bond sale? meg: listen, this is far bigger than hp. this is all around the global economy and where people feel safe putting their money. my view is we have to react to

the situation in which we find ourselves. we are not going to be able to influence global currencies. and my view is that the dollar is going to remain strong for a bit. i do not know how long, i don not know if it goes to parity, or stays where it is, or gives up some ground. when you run a company you have to be able to manage it. emily: would you consider a bond sale? meg: you know, probably not at this juncture. you know, we will be refinancing the debt of hp when we split into two companies and it is very frustrating in many ways because, you know, we are on such a great path, and if we had not had this currency we would have degrees of flexibility. but it is what it is. emily: there is a presidential election happening. former hp ceo carly fiorina is running. many other candidates. are there candidates you like? meg: i think there is a lot of good candidates running. we will see how this sorts out. there are a lot of republican

candidates, i mean, it's sort of a new one every day. what i would say is we should be really grateful for people who want to run for public office. we need great candidates, we need a diversity of backgrounds, and i will tell you from personal experience it is not easy. emily: so what is next for you? how long do you see yourself doing this? what would you want to do after hp? meg: gee, i do not know. you know, i have to say, i have to say, i have stopped you know, giving sort of, you know, forecasts around this and i never dreamed i would run for governor. and i also said i probably will never be another ceo. so you never know where life will take you, twists and turns. and you know, so we will see. emily: how much longer do you see yourself doing this? meg: i do not honestly know. i am excited to get these two companies off on a great path and i have made a commitment to both hp inc. and hewlett-packard enterprise. and i will see this through. i think you know i love a challenge. so -- emily: all right. meg whitman, ceo of hp, thank you so much for joining us, it has been really great to have you. meg: thank you. thank you for coming to "hp

discover." emily: and good luck. meg: thank you. ♪

♪ emily: he worked alongside steve jobs to revolutionize the way we listen to music and became known as the godfather of the ipod. he spent nearly a decade at apple, then hatched a company of his own. in 2010, he cofounded nest labs, where he promised to invent every unloved product in the home. a promise so thrilling, google, soon to the alphabet, snapped up nest and its star ceo for $3.2 billion. joining me today on "studio 1.0," nest ceo and cofounder, tony fadell. tony, so great to have you here. tony: it's so great to be here. i love it. emily: you were born in mich