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CNBC Exclusive: CNBC Transcript: Hewlett-Packard Chairman & CEO Meg Whitman Speaks with CNBC's David Faber on "Squawk on the Street" Today

WHEN: Today, Wednesday, November 26th

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Hewlett-Packard Chairman & CEO Meg Whitman on CNBC's "Squawk on the Street" today, Wednesday, November 26th. Following are links to the interview on CNBC.com:http://video.cnbc.com/gallery/?video=3000334236, http://video.cnbc.com/gallery/?video=3000334204 and http://video.cnbc.com/gallery/?video=3000334225.

All references must be sourced to CNBC.

DAVID FABER: HEWLETT-PACKARD, WHICH OF COURSE REPORTED EARNINGS AFTER THE BELL YESTERDAY. $1.06 A SHARE, NONGAP EARNINGS DID MEET EXPECTATIONS. THAT FOR ITS FISCAL FOURTH QUARTER OF THE YEAR AS WE NOTED EARLIER, REVENUES A BIT LIGHT WHICH DID SEEM TO CONTRIBUTE TO A SLIGHT SELL-OFF IN THE STOCK. LET'S CALL IT 1 TO 2% AFTER THE MARKET CLOSED YESTERDAY. OF COURSE WE'LL SEE HOW THE STOCK OPENS ABOUT 26 MINUTES FROM NOW. JOINING ME NOW IN A CNBC EXCLUSIVE INTERVIEW, IS HEWLETT-PACKARD'S CHAIRMAN AND CEO MEG WHITMAN. ALWAYS GOOD TO HAVE YOU EVERY QUARTER, MEG. THANK YOU FOR BEING WITH US.

MEG WHITMAN: WELL, THANK YOU FOR HAVING ME. GOOD MORNING.

FABER: YOU KNOW, I WAS LOOKING AT SOME OF THE ANALYST NOTES THIS MORNING, SORT OF SUMMING UP THE QUARTER. ONE OF THEM SAID LUKE WARM. DIDN'T HAVE THAT SPARK OF A GREAT QUARTER NOR THE DRAMA OF SOMETHING THAT MIGHT HAVE BEEN A PARTICULARLY BAD QUARTER. DO YOU AGREE?

WHITMAN: WELL, I ACTUALLY THINK IT WAS A PRETTY GOOD QUARTER FOR HEWLETT-PACKARD. REVENUES WERE DOWN SLIGHTLY BUT WE SAW FOR THE FIRST TIME IN MANY YEARS OPERATING MARGIN EXPANSION IN EVERY SINGLE BUSINESS AND THAT HASN'T HAPPENED SINCE EARLY 2011. SO WHAT YOU CAN SEE IS THAT OUR COST DISCIPLINE IS IN PLACE AND WE'RE EXCITED ABOUT THE FUTURE BECAUSE WE HAVE THE BEST INNOVATION ENGINE THAT WE HAVE HAD IN MANY YEARS, PERHAPS A DECADE AT HP. SO GOOD QUARTER AND NOW WE'RE LOOKING FORWARD TO '15.

FABER: RIGHT. OF COURSE '15 IS ALSO GOING TO BE A MONUMENTAL YEAR FOR THE COMPANY BECAUSE YOU'RE GOING TO BE SPLITTING HEWLETT-PACKARD IN TWO. SOMETHING THAT WILL TAKE PLACE LET'S CALL IT OCTOBER OR SO OF NEXT YEAR. IT'S BEEN ABOUT SIX WEEKS SINCE YOU FIRST ANNOUNCED THE INTENT TO SPLIT INTO TWO COMPANIES, TWO FORTUNE 50 COMPANIES. MEG, YOU MENTIONED MARGINS GOING UP AND THEY DID SIGNIFICANTLY. CAN YOU CONTINUE TO INCREASE THAT AND WHAT ABOUT COSTS THAT CAN KEEP COMING OUT OF THIS COMPANY AS A RESULT OF THE SPLIT?

WHITMAN: YEAH. WELL, OUR OBJECTIVE FOR HP IN 2015 IS TO MAKE SURE THAT WE HIT OUR NUMBERS AND WE DELIVER WHAT WE TOLD THE STREET WE WOULD DELIVER BECAUSE THAT'S THE BEST WAY TO GET THESE TWO COMPANIES OFF ON THEIR OWN GOOD FOOTING. SO YOU – IN THE SEPARATION, YOU CAN IMAGINE, WE HAVE A SMALL NUMBER OF PEOPLE DEDICATED TO THE SEPARATION, BUT 99% OF THE FOLKS AT THE COMPANY ARE ALL ABOUT DELIVERING '15. AND WE'RE ABOUT PROFITABLE GROWTH. WE'RE ABOUT INTRODUCING ALL THE NEW INNOVATION TO OUR CUSTOMERS AND OUR PARTNERS. AND BOY, THERE'S A COUPLE AREAS I'M REALLY EXCITED ABOUT, PARTICULARLY OUR ENTERPRISE GROUP, OUR NEW LINE OF INDUSTRY STANDARD SERVERS AND HIGH PERFORMANCE COMPUTE. WE'RE EXCITED ABOUT INK IN THE OFFICE AND OFFICE JET PRO X. SO WE HAVE A LOT OF GOOD THINGS COMING.

FABER: RIGHT. NOW, YOU KNOW, BACK TO THIS IDEA OF COSTS. SINCE I THINK IT WAS 2012 WHEN YOU FIRST ANNOUNCED CUTBACKS IN EMPLOYEES OR LAYOFFS ESSENTIALLY, 27,000 THEN MOVED UP TO AS MUCH AS 41,000 AND THEN IN OCTOBER ANOTHER 14,000. SO 55,000 JOB CUTS OVERALL. IS THAT GOING TO BE ENOUGH? IS THAT WHERE THE MARGIN IMPROVEMENT REALLY HAS COME FROM?

WHITMAN: IT'S ACROSS THE BOARD, DAVID. CERTAINLY WE ARE MANAGING OUR LABOR COSTS EFFECTIVELY, BUT IT IS IN SUPPLY CHAIN. IT'S IN GLOBAL REAL ESTATE. EVERY SINGLE THING THAT WE DO, WE'VE LOOKED AT AND SAID, HOW CAN WE DO THIS MORE EFFECTIVELY SO WE CAN HAVE A COST STRUCTURE THAT ALLOWS US TO PROVIDE PRODUCTS TO CUSTOMERS AT BETTER PRICES. AND IN THIS NEW WORLD ORDER, I THINK THERE IS A WHOLE NEW STYLE OF BUSINESS GOING ON OUT THERE. IT'S VERY FAST. YOU HAVE TO BE REMARKABLY COST COMPETITIVE. SO EVERY COST MATTERS. AND ONE OF THE REALLY INTERESTING THINGS ABOUT SEPARATING THIS COMPANY IS WE GET A CHANCE TO CLEAN SHEET TWO FORTUNE 50 COMPANIES THAT NO ONE EVER GETS A CHANCE TO DO. SO WE LOOK AT EVERY LINE ITEM AND ASK THAT QUESTION THAT YOU WISH YOU COULD ALWAYS ANSWER IN BUSINESS, WHICH IS IF I KNEW WHAT I KNEW NOW, HOW WOULD I SET UP THESE TWO COMPANIES? AND WE HAVE AN OPPORTUNITY TO NOT ONLY ASK THAT QUESTION, BUT TO ACTUALLY ANSWER IT. SO I THINK BOTH OF THESE COMPANIES WILL BE LEANER AND MORE COST EFFECTIVE. THERE'S MORE WE CAN DO IN TECHNOLOGY. THINK ABOUT THIS. WE GET TO CLEAN SHEET TWO NEW TECHNOLOGY OPERATIONS FOR BOTH COMPANIES. OUR FUNDAMENTAL I.T. IS BASED ON A MANUFACTURING SYSTEM BECAUSE WE USED TO BE A MANUFACTURER. SO IT'S ALL PARTS AND SKEW BASED. WE DON'T HAVE TO DO IT THAT WAY ANYMORE AND WE CAN REALLY JUST BUILD THE ENTIRE NEW STYLE OF I.T. FOR BOTH THESE COMPANIES. SO THOSE ARE THE KINDS OF THINGS THAT ARE GOING TO MAKE US MORE EFFICIENT AND EFFECTIVE FOR THE NEXT DECADE.

FABER: YOU KNOW, MEG, ON THIS NOTION OF INNOVATION AND SOME OF THE THINGS YOU'RE DISCUSSING AS BENEFITS FROM THE UPCOMING SPLIT, I DID WANT TO GET YOUR REACTION TO SOMETHING THAT ONE OF YOUR COMPETITORS WROTE YESTERDAY IN "THE WALL STREET JOURNAL." I'M TALKING ABOUT MICHAEL DELL, IN AN EDITORIAL HE HAD YESTERDAY. IN WHICH HE STATED, ALONG WITH A NUMBER OF OTHER THOUGHTS, THAT "MAJOR PLAYERS LIKE IBM AND HEWLETT-PACKARD ARE SELLING OFF AND SPLITTING UP. HUGE DISRUPTION AT A TIME WHEN LONG-TERM INNOVATION AND CUSTOMER FOCUS HAVE NEVER BEEN MORE CRITICAL. SUCH MOVES MAY BOOST SHARE VALUES IN THE SHORT TERM, BUT TOO OFTEN, AT THE EXPENSE OF REAL INNOVATION." YOUR RESPONSE?

WHITMAN: SO I WOULD SAY IT'S QUITE THE OPPOSITE AT HP. OUR INNOVATION ENGINE IS THE BEST THAT IT HAS BEEN IN A DECADE AND FRANKLY, SEPARATING THESE TWO COMPANIES WILL ALLOW EACH COMPANY TO FOCUS ON THE INNOVATION THAT IS MOST IMPORTANT TO THEIR COMPANIES WITHIN AN ORGANIZATION. AND YOU HAVE TO REMEMBER, PRINTING AND PCs, A THIRD OF THEIR BUSINESS IS TO CONSUMERS. YOU KNOW, THROUGH BEST BUY AND MAJOR RETAILERS ACROSS THE WORLD AND MAJOR WEBSITES. AND THEY'RE NOW GOING TO BE DEEPLY FOCUSED ON WHAT'S THE INNOVATION. LIKE IMMERSIVE COMPUTING, LIKE 3D PRINTING THAT IS GOING TO MAKE A DIFFERENCE TO THEIR BUSINESS. WHILE ON THE DATA CENTER SIDE, WE ARE ALL OVER THE SOFTWARE DEFINED DATA CENTER, WHAT IS GOING TO HELP CIOs FOR BUSINESSES OF ANY SIZE REDUCE COSTS, BECOME MORE AGILE AND BE BETTER ABLE TO SERVICE THEIR LINES OF BUSINESS. SO I WOULD ARGUE THAT FOCUSING IS GOING TO LEAD TO EVEN MORE ON TARGET INNOVATION FOR THOSE CUSTOMERS. SO WE THINK IT'S A BIG BENEFIT. AND AS FAR AS DISRUPTION, I AM REALLY PROUD OF THE HEWLETT-PACKARD ORGANIZATION. WE'VE GOT PEOPLE FOCUSED ON THE SEPARATION AND EVERYONE ELSE UNDERSTANDS THAT THEY'VE GOT A DAY JOB THAT IS GOING TO HELP SET THIS COMPANY UP IF WE DO IT WELL. SO WE – THERE WAS NO DISRUPTION AT ALL IN THE FOURTH QUARTER. PEOPLE WERE NOT HANGING AROUND THE WATER COOLER. THEY WERE OUT IN FRONT OF CUSTOMERS EXPLAINING THE SEPARATION AND EXPLAINING WHY WE THOUGHT THIS WAS GOING TO BE AN ADDED ADVANTAGE FOR CUSTOMERS AND PARTNERS. SO I THINK THERE WON'T BE ANY DISRUPTION HERE AND WE'RE REALLY EXCITED ABOUT THE FUTURE AND SO ARE THE EMPLOYEES, WHICH IS GREAT FUN.

FABER: ON THE – AGAIN, ON THE SPLIT ITSELF, YOU KNOW, A NUMBER OF ANALYSTS AND THOSE WHO FOLLOW THE COMPANY HAVE HAD TIME TO SORT OF DIGEST IT AND ASK THEIR QUESTIONS. AND I WANT TO ASK ONE OF YOU. EVERCORP, A NOTE THAT THEY WROTE ABOUT A MONTH OR SO AGO, WHEN IT COMES TO THE SPLIT, THEY CANNOT BELIEVE THAT HEWLETT-PACKARD POST-SPLIT COULD – CANNOT HELP BUT BELIEVE THAT HEWLETT-PACKARD POST-SPLIT COULD FACE AT LEAST A FEW PERCENTAGE POINTS OF REVENUE RISK FROM LOSS CROSS SELL CHANNEL LEVERAGE AND THAT ENTERPRISE HARDWARE RISKS AT LEAST A 1 TO 4% MARGIN HEAD WIND ONCE YOU ARE NO LONGER GETTING THE PC LEVERAGE. GOING TO THIS POINT OF DISRUPTION AND OF POTENTIAL DRAWBACKS IN SOME WAY TO YOUR ABILITY TO BUY MORE CHEAPLY FOR EXAMPLE, MEG. CAN YOU ADDRESS THAT?

WHITMAN: SURE. ONE OF THE QUESTIONS I GET ASKED ALL THE TIME IS WHAT ABOUT THE SUPPLY CHAIN LEVERAGE. BECAUSE PCs AND SERVERS WE BUY MEMORY, WE BUY CHIPS AND THERE IS LEVERAGE TO BEING A BIG PURCHASER OF THOSE COMMODITIES. SO WE WILL HAVE A SUPPLY CHAIN AGREEMENT BETWEEN HEWLETT-PACKARD ENTERPRISE AND HP INC TO MAKE SURE THAT WE DON'T LOSE ANY BUYING LEVERAGE WITH SOME OF OUR BIGGEST PARTNERS. AND THEN THERE MAY BE SOMETIMES, WITH CERTAIN VENDORS, WHERE IT'S ACTUALLY BETTER TO BE SMALLER AND MORE NIMBLE SO WE CAN BUY MORE ON THE SPOT MARKET AND TAKE ADVANTAGE OF DEALS THAT THEY HAVE TO OFFER THAT ISN'T TIED UP IN AN ENORMOUS PURCHASING AGREEMENT WITH SOME OF OUR BIG PARTNERS. SO WE'RE GOING TO HAVE A SUPPLY CHAIN AGREEMENT AND WE'LL ALSO HAVE THE FLEXIBILITY TO MANEUVER MORE IF WE NEED TO AND IT'S ADVANTAGEOUS TO BOTH COMPANIES.

FABER: PERSONAL SYSTEMS GROUP HAD A STRONG QUARTER. ADDING TO WHAT HAD BEEN SIGNIFICANT GAINS, PARTICULARLY IN THE COMMERCIAL MARKET, ALTHOUGH THE WINDOWS XP TREND IS STARTING TO RUN OFF A LITTLE BIT, THAT TRANSITION. ARE YOU EXPECTING TO SEE THE CONSUMER COME AROUND WHEN IT COMES TO ACTUALLY BUYING PCs?

WHITMAN: WE ARE SEEING REAL LIFE IN THE CONSUMER SEGMENT. COMMERCIAL WAS THE FIRST TO COME BACK, AS YOU POINT OUT, ON THE XP MIGRATION. BUT WE DO EXPECT THE CONSUMER NOW TO BE STRONG. WE SAW PRETTY STRONG RESULTS FROM THE CONSUMER IN THE FOURTH QUARTER AND AGAIN, I THINK IT'S A REFRESH CYCLE. WHAT DROVE THE COMMERCIAL SIDE WAS OKAY, TIME TO UPGRADE XP. WE HAVEN'T UPGRADED IN A WHILE, AND NOW YOU'RE SEEING THE CONSUMER START THE SAME THING. SO LISTEN, WE BELIEVE THAT SEGMENT WILL BE IN A SLOW DECLINE OVER TIME, BUT WE OUGHT TO BE ABLE TO GAIN MARKET SHARE AS THAT INDUSTRY CONSOLIDATES. SO THE OUTLOOK FOR THE PC BUSINESS IS PRETTY GOOD AS WE GO INTO '15 AND '16.

FABER: DO YOU HAVE AN OUTLOOK FOR THE U.S. DOLLAR? I ASK THAT BECAUSE, OF COURSE, YOU DID FACE CURRENCY HEAD WINDS. WE WOULD EXPECT THAT MANY MULTINATIONALS WILL BE FACING THE SAME KIND OF PRESSURES. NOT JUST FROM THE CURRENCY ITSELF, BUT ALSO YOUR ABILITY TO COMPETE AGAINST DOMESTIC COMPETITORS IN SOME MARKETS. YOU NOTED PRINTING, FOR EXAMPLE, IS FACING SOME PRICE COMPETITION FROM JAPAN. WILL THAT CONTINUE IN '15?

WHITMAN: YES. WE THINK IT WILL. SO WHAT WE TOLD THE MARKET YESTERDAY AND WHEN WE ANNOUNCED THE SEPARATION THAT WE THOUGHT REVENUE GROWTH IN 2015 WOULD BE ABOUT FLAT. IF IT WAS NOT FOR THE CURRENCY HEADWINDS THAT WE WERE FACING, WE THOUGHT WE WOULD GROW ABOUT 2%, WHICH WAS REALLY ABOUT WHERE WE THOUGHT WE WOULD BE. BUT THE CURRENCY HAS MOVED AT LIGHTNING SPEED IN JUST THE LAST QUARTER. AND WE HEDGE, WE DO A LOT OF THINGS, BUT WHEN THE CURRENCY MOVES THAT FAST, THERE'S NOT THAT MUCH WE CAN DO. AND THEN ON THE OTHER SIDE, OF COURSE, YOU KNOW, THE JAPANESE COMPETITORS HAVE THE ADVANTAGE OF A WEAKENED YEN SO THEY CAN PRICE AGGRESSIVELY AND WE ARE SEEING SOME OF THAT. THAT SAID, WE'RE STICKING TO OUR GUIDANCE. WE THINK WE CAN DELIVER '15 BUT IT WOULD BE BETTER IF THE – IF WE WEREN'T FACING THE CURRENCY HEAD WINDS ACROSS THE BOARD NO QUESTION ABOUT IT. AND AS I SAID, IT'S NOT JUST US. IT IS MOST AMERICAN COMPANIES.

FABER: RIGHT. NOW, WILL YOU CHOOSE TO COMPETE ON PRICE WHERE YOU HAVE TO OR ARE YOU WILLING TO CEDE IT?

WHITMAN: SO WE ARE REALLY FOCUSED ON PROFITABLE GROWTH. WE LOOK AT THREE MAJOR METRICS. WHAT'S THE REVENUE GROWTH, WHAT'S THE PROFITABILITY OF THAT REVENUE GROWTH, AND ARE WE GAINING OR HOLDING SHARE. AND WHEN WE DO ALL THREE OF THOSE, WE CALL IT, YOU KNOW, WE HIT THE TRIFECTA. AND SO IT'S A BALANCE. BUT WE'RE VERY, VERY FOCUSED ON PROFITABLE GROWTH. SHARE FOR SHARE SAKE OR REVENUE GROWTH AT LOSING MARGINS IT'S NOT A WINNING STRATEGY FOR THIS COMPANY. SO PROFITABLE GROWTH AND BOY, WE WERE ABLE TO DO THAT IN MANY QUARTERS LAST YEAR AND PCs WERE ONE OF THOSE.

FABER: RIGHT. THE COMPANY ENDS THE FISCAL YEAR WITH $5.9 BILLION IN CASH, LEADING SOME TO SPECULATE WELL, YOU KNOW, MAYBE THEY'RE GOING TO START TO THINK ABOUT M&A AGAIN. IS THAT SOMETHING YOU CAN THINK ABOUT PRIOR TO THE SPLIT OR SHOULD THOSE WHO BELIEVE THAT THERE WILL BE MERGERS AND ACQUISITIONS IN THE FUTURE FOR HP, ENTERPRISE OR INC, DOES THAT ONLY COME AFTER THE SPLIT?

WHITMAN: WELL, DEPENDING ON WHAT THE OPPORTUNITY IS WE MIGHT DO SOMETHING THIS YEAR IN 2015 TO SET BOTH COMPANIES UP, BUT, YOU KNOW, DEALS HAVE THEIR OWN TIMETABLE AND AT ONE POINT WE HAVE TO ACTUALLY MAKE SURE THAT WE CAN CLOSE THE BOOKS. WE HAVE A TRIAL CLOSE FOR THREE MONTHS BEFORE WE ACTUALLY SEPARATE. SO THERE WILL BE A MORATORIUM ON ACQUISITIONS AT SOME POINT DURING '15, BUT WE HAVE SOME TIME NOW AND IF THE RIGHT TARGET COMES ALONG AND IT MAKES SENSE FOR SHAREHOLDERS, WE'LL BE VERY DISCIPLINED FINANCIALLY, WE WILL BE RETURNS BASED. BUT IF IT FURTHERS THE AGENDA OF ONE OF THE TWO FUTURE COMPANIES, WE'LL CERTAINLY TAKE A LOOK AT IT.

FABER: RIGHT. OF COURSE THAT COMPANY WAS NOT EMC, WAS IT?

WHITMAN: DON'T COMMENT ON RUMORS AND SPECULATION. WHAT I WILL SAY IS THIS INDUSTRY IS UNDERGOING SOME OF THE BIGGEST CHANGES THAT I THINK MOST OF US HAVE SEEN IN OUR CAREER. AND SO YOU HAVE TO BE NIMBLE, YOU HAVE TO BE FLEET AFOOT AND YOU HAVE TO BE ABLE TO MOVE WHEN IT'S REQUIRED.

FABER: SPEAKING OF CAREERS, YOURS ONCE INCLUDED POLITICS, OF COURSE, HAVING RUN FOR GOVERNOR. I NOTICE THAT YOUR FELLOW COMPATRIOT IN YOUR STATE, CARLY FIORINA, WHO ONCE RAN HEWLETT-PACKARD, MAY BE CONSIDERING RUNNING FOR PRESIDENT, MEG. ANY ADVICE TO GIVE?

WHITMAN: CARLY DOESN'T NEED ADVICE FROM ME. SHE RAN FOR SENATE IN CALIFORNIA. SHE'S A TERRIBLY ACCOMPLISHED WOMAN AND, YOU KNOW, LISTEN I HAVE A LOT OF RESPECT FOR PEOPLE WHO WANT TO RUN FOR PUBLIC OFFICE. AS I FOUND OUT, UNTIL YOUR NAME IS ON THE BALLOT, YOU REALLY DON'T UNDERSTAND WHAT IT'S ABOUT. AND IT'S A REAL SACRIFICE, IT'S A REAL HONOR, IT'S A REAL JOY, BUT I'M IN FAVOR OF ANYONE WHO HAS THE APPETITE TO SERVE THIS COUNTRY OR THEIR STATE OR LOCAL GOVERNMENT, PEOPLE SHOULD GO AND DO IT BECAUSE WE NEED GREAT LEADERS.

FABER: ALL RIGHT. MEG WHITMAN, AS ALWAYS APPRECIATE YOUR TIME. THANK YOU.

WHITMAN: THANK YOU.

FABER: MEG WHITMAN, CHAIRMAN AND CEO OF HEWLETT-PACKARD.

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