HPE could mitigate impact of future U.S. tariffs, CEO says

Reuters
FILE PHOTO: A trader passes by the post where Hewlett Packard Enterprise Co., is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 25, 2016. REUTERS/Brendan McDermid/File Photo

By Stephen Nellis

SAN FRANCISCO (Reuters) - Hewlett Packard Enterprise Co can boost manufacturing at its facility in Wisconsin if trade tensions with China escalate, Chief Executive Antonio Neri said on Monday.

Speaking at a Reuters Newsmaker event in San Francisco, Neri said HPE, whose products are not directly affected by tariffs that took effect last week, could modify production plans if additional tariffs affect its equipment made in China. HPE produces three servers every 10 seconds globally.

"We have the ability to manufacture more products in the United States. That's not the issue," Neri said. "The issue is how to manage our supply chain to best serve our customers."

HPE shares were up 2 percent to $15.28 during midday trading Monday.

The United States and China slapped duties on $34 billion (£25.7 billion) worth of each other's imports on Friday, with machinery, aerospace and other industrial companies among the hardest hit.

President Donald Trump has threatened additional tariffs, possibly targeting more than $500 billion worth of Chinese goods.

HPE supplies servers, networking gear and other equipment to businesses and government agencies that host their own data centre. It has also been working closely with Microsoft Corp to help businesses connect their data centres to Microsoft's Azure cloud computing service.

Neri, who took over as CEO at HPE earlier this year, has been moving the company away from low-margin businesses such as so-called "commodity" computer servers. Instead, it has focused on more specialized computers. Neri on Monday announced that HPE is working with Swiss researchers to build a special supercomputer for the so-called "Blue Brain" research project that is studying diseases such as Alzheimer's.

Neri also touched on U.S. immigration policy during the event. Neri, the son of Italian parents who was raised in Argentina before immigrating to the United States, said that he disagreed with the federal government's recent immigration policies. He said that HPE has a "process" to engage with the government but did not specify what the company was advocating for with the government.

"I'm not in agreement with what is going on here," Neri said of U.S. immigration policy. "This is not how I saw the United States 30 years ago. That said, it's a tough, complex situation, so we have to work with lawmakers to make sure we have the right approach."

(Reporting by Stephen Nellis; Editing by Tom Brown and Lisa Shumaker)