HP willing to 'engage' with Xerox over potential merger - CEO

Any potential deal negotiation must be based on 'realistic synergies' says Lores

HP has softened its stance on a tie-up with Xerox, with CEO Enrique Lores revealing he is "open to engage" with the copier vendor.

Lores was speaking as HP published its Q1 results which beat expectations for both sales and earnings, with revenue down 0.6 per cent year on year to $14.6bn (£11.2bn). Net earnings fell 15.6 per cent to £700m.

"We are out of the gate, very strong," Lores said.

"Our team is on a mission to out-innovate, out-execute and outperform, and it was an impressive quarter for HP."

Lores also boasted of growth in HP's PC division, which saw revenue grow two per cent to $9.9bn.

But the print division continued to struggle, with sales falling five per cent to $4.7bn.

The troublesome supplies unit saw revenue decline again - seven per cent to $3bn (included in the $4.7bn above).

Lores also opened up on the huge buyback announced by HP, designed to return $16bn to shareholders, via debt, and make the vendor less attractive to a takeover.

The CEO once again denounced Xerox's takeover bid, claiming it undervalues HP and creates an "irresponsible capital structure".

But Lores did reveal a softened stance, claiming that HP is now willing to negotiate with Xerox for the first time.

He also acknowledged the potential cost synergies of a merger, but put the figure at $1bn rather than the $2bn mooted by Xerox.

"First, we need to make sure that the value exchange between the two companies reflects the real value of each of them," he said.

"Second, the resulting entity needs to have a capital structure that makes sense, which will be able to address the needs of the businesses that we'll be running.

"And third, it needs to be based on synergies that are realistic, and that can be achieved. This is a conversation that we think is possible to have at this point. And this is what we have opened the communication to - opened the engagement to talk about."