Good day, and welcome to the First Quarter 2016 HP Inc. Earnings Conference Call. My name is Denise, and I will be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Diana Sroka, Head of Investor Relations. Please proceed.

Good afternoon. I'm Diana Sroka, Head of Investor Relations for HP Inc., and I'd like to welcome you to the Fiscal 2016 First Quarter Earnings Conference Call with Dion Weisler, HP's President and Chief Executive Officer; and Cathie Lesjak, HP's Chief Financial Officer. Before handing the call over to Dion, let me remind you that this call is being webcast. A replay of the webcast will be made available shortly after the call for approximately 1 year. We posted the earnings release and the accompanying slide presentation on our Investor Relations web page at www.hp.com. As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. For more detailed information, please see disclaimers in the earnings materials relating to the forward-looking statements that involve risks, uncertainties and assumptions. For a discussion of some of these risks, uncertainties and assumptions, please refer to HP's SEC reports including our most recent Form 10-K. HP assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HP's Form 10-Q for the fiscal quarter ended January 31, 2016. For financial information that has been expressed on a non-GAAP basis, we've included reconciliations to the comparable GAAP information. Please refer to the tables and slide presentations accompanying today's earnings release. With that, I'll hand it over to Dion.

Thank you, Diana. Good afternoon, everybody, and thank you for dialing in today. We've completed the first quarter as HP Inc. And while we continued to face macroeconomic and market headwinds, we are executing to the plan we laid out at our Security Analysts Meeting last September. We delivered non-GAAP diluted net earnings per share of $0.36, in the middle of our outlook range. We returned more than $1 billion of capital to shareholders through our planned quarterly dividend and aggressive share buybacks, taking advantage of the stock price. And while revenue continued to be challenged by market contraction in PCs and core printing, we delivered constant currency revenue growth in APJ and in strategic growth segments of the portfolio, including commercial mobility, retail solutions, graphics and services. Cash flow for the quarter was below our expectations, driven by changes in working capital, which was impacted by lower personal systems volume. We've taken immediate actions to stay on track to deliver our full year commitment. Cathie will walk you through those details in just a few minutes. As you consider our financial performance for the quarter, remember that we operate in mature markets. This is an environment where we know how to win, gain share and out execute our competitors. A key driver of success in competitive markets is product innovation and differentiation. Innovation is the lifeblood of HP. This year at CES, we had an outstanding show of new products and took home more than a dozen awards for products like the EliteBook Folio, the world's thinnest and lightest business-class notebook. Demonstrating the consumerization of IT, we took best of show for a business-class product because it has the rugged features needed for mobile workers, but the sleek and stylish design that, "Let's face it, we all want." As…

Thanks, Dion. Before I begin, I want to comment on a few financial reporting items. The SEC filings and investor deck reflect historical financials for discontinued operations basis of accounting, which is also what I'll speak to today. In this accounting presentation, there are some historical expenses that are allocated fully to the parent company, which was HP Inc. in the U.S. Some examples include: corporate governance costs and SG&A, foreign exchange gains and losses and interest expense in OI&E, all related to HP Co. Because of these accounting rules, historical expenses reported in continuing operations are higher as compared to a pro forma operational view. Net revenue, gross margin and R&D expense are more comparable year-over-year. Turning to the P&L results. Q1 performance was largely as expected. And overall, we are making progress against the strategy we laid out at SAM. At the company level, we reported net revenue of $12.2 billion, down 12% year-over-year or 5% at constant currency. While the EMEA and Americas regions continued to decline, we saw constant currency revenue growth in APJ, driven by strength in Personal Systems. We had a favorable impact due to onetime release of deferred revenue related to legacy HP Financial Services business, now that our engagement is no longer intracompany. This was accounted for in corporate elimination. Gross margin of 18.7% was down 0.7 points year-over-year due to the unfavorable mix and competitive pricing in print, partially offset by benign commodity costs and favorable mix in Personal Systems. Gross margin was down 0.6 points sequentially due to weak currencies and print mix, combined with continued competitive pricing. Operating profit of 7.5% was down 0.4 points year-over-year, driven by print gross margins and loss of operating expense leverage. Total operating expenses of $1.4 billion were down 14% year-over-year, primarily due…

[Operator Instructions] The first question will come from Sherri Scribner of Deutsche Bank.

I wanted to get a sense if you could provide us with some detail on what's happening in the PC market? The data points have been relatively negative. I think you said that you thoughts units declined 11% for the market this quarter. I wanted to see what trends you're seeing right now?

Thanks, Sherri. Look, as we've said, tough market conditions we expected that, we outlined that at the security analyst meeting, and we expect that for several quarters ahead. We broadly agree with IDC's predictions of the market sort of mid-single-digit declines. However, we see in the back half of this year that revenue will begin to improve as the technology improves and as channel inventory works its way out of the system. It's a continuous evolution. As market leaders, we are looking to evolve and create new categories. Look at the work we did this week in Mobile World Congress with the Elite x3. That's a terrific example of category creation. That's a new mobile solution. But it's not a PC. It's not a phablet. It's not a notebook. It's all 3. So the PC lines are kind of being redrawn at the moment. And our goal, as it has been consistently for the past 3 years, is to gain profitable share. We choose to play in certain areas, we choose not to play in other areas. So we have a fairly consistent formula here. We segment the market. We figure out where to play, where not to play. We continue to take costs out of the system. We continue to drive innovation into the system, and we're not after share for share's sake. I would say that Windows 10, whilst I still believe is a tremendous operating system platform and universal apps and continue computing make devices like the Elite x3 a reality, we have not yet seen the anticipated Windows 10 stimulation of demand that we would have hoped for. And we're carefully monitoring any sort of price developments that could further weaken demand. So we're operating in still a large market. The big guys are getting bigger, and we think there is opportunity in that landscape.

And actually, Sherri, let me add one more thing to the channel inventory, because we tightly manage our channel inventory overall, and we are in a healthy position. But we also manage our channel inventory very carefully from an aged perspective. I think, Dion, at one point gave an example of -- alluded to age channel inventory as rotting fish, and we're not in that situation. We are actually in a very nice position. That may be different than some of our competitors out there where we're hearing that there is still a fair amount of channel inventory. So I think we're well positioned.

Okay, great. And then just as a follow-up, can I ask about the turnaround in the supplies business. The supplies business declined again, and just wanted to get an update on your thoughts about when we start to see that supplies revenue turn around?

So in our outlook for the year, we do expect that the supplies revenue trajectory will improve over the course of the year. We have very tough comparers year-over-year, because in the first half of last year, we had very favorable foreign exchange contracts. But what else also was very clear, and we updated this outlook on the Q4 earnings call that in fact the supplies revenue in constant currency will -- we expect will stabilize by the end of 2017, and we are reaffirming that today.

And, of course, as you know and as we've explained the full-box model, supplies is also a function of units that we place into the system. And so as we mentioned on the Q4 earnings call, we recognize that the challenging environment at the moment with the double-edged sword of the Japanese competitors leveraging a weaker yen, putting pressure on pricing was something that we needed to, indeed, respond to by taking costs out of the system, recognizing that this is, indeed, the new normal. And so we went to work. We've developed very robust plans to take non-revenue-generating costs out of the system so that we can place those marginal units, which, of course impacts supplies positively in the future.

So I think maybe this will be a good time maybe to briefly just talk about the 4-box model. As we talked about before, the key elements of how we're going to drive supplies revenue over time, the first is basically looking at the installed base, and looking at the installed base from a perspective of total size, to Dion's point, increasing the installed base by taking more costs out so that we can place units that are marginal today, that can be profitable in the future, is important. But it's also important to look at what the mix is within that installed base, which is the second box, which is around usage, and that's really focusing on placing higher-usage units. Then you also going to look at what your position is from a market share perspective. And we talked about -- I think Dion talked in his prepared remarks about the fact that we have a multipronged approach to drive increasing market share. Aftermarket share -- sorry, aftermarket supplies share with online, more feet on the street, but also driving Instant Ink adoption in our developed markets. We have in fact expanded our market to now include Spain and Canada, to continue to drive managed print services where we get a very high HP supplies attached. And we saw double-digit as-reported and constant currency growth in new TCV for managed print services, and then finally, kind of completing the rollout of jet intelligence in the laser market. When we come out with a new platform, that HP branded attach is extremely high. And we came out with this new platform called Jet Intelligence, and we're completing the rollout this year.

Our next question will come from Wamsi Mohan of Bank of America Merrill Lynch.

I have one question for Cathie and one for Dion. So Cathie, your free cash flow obviously disappointed in the quarter. Can you help us think through how you think the linearity of this cash flows is going to play out this year? And if you could put that in context with maybe HP Inc.'s last year's cash flow linearity, that'll be helpful. How significantly different it will be this year versus last year? And I have a follow-up for Dion.

Sure. So to level set, our expectations for Q1 were that we would generate about $300 million worth of cash. But with the lower Personal Systems volume, combined with their very negative cash conversion cycle, it really put pressure on our accounts payable and our accrued liabilities, our volume-sensitive accrued liabilities, such as discounts. You might think that lower discount liability is a good thing, but if it's really falling in line with -- in proportion to revenue, it creates a challenge at the end of the quarter. And so we believe that a lot of that is timing, that at the end of the day the real permanent impact to cash flow over time is the cash earnings of that lost revenue.

And sort of in addition to that, let me say that we will respond to the cash position in the same way as we responded to the earnings challenges. We went to work. We have very targeted actions in place to address working capital: clear plans around driving inventory; lower, better supply demand matching within the teams; opportunities for us with some vendors on payment terms; and also really squarely focused on recovering aged inventory accounts receivables.

And so if you think about the linearity in the year, the linearity is different than what we've seen historically. And I think you'll understand that when I kind of lay out for you what is some of the key assumptions within our free cash flow outlook. First off, we are going to leverage the targeted working capital actions that we've taken as a result of the Q1 miss on expectations. And we do expect that we will end with a cash conversion cycle now that is probably at least as good as the FY '15 exit and potentially better by a couple of days. We also have to deliver our EPS of $1.59 to $1.69, and as I'm sure someone will talk to us in the -- or ask us about, it is a bit back-end loaded, which obviously is going to drive free cash flow a bit back-end loaded as well. PCs, we do expect the PC declines to moderate over the course of the year. And then we've got separation and restructuring cash payments of about $300 million each that are going to take place over year -- over the course of the year.

I appreciate the color there. And Dion, if I could follow up. I mean, the recent move in the Japanese yen, it's moved fairly strongly in the month of February. Have you seen any change in the pricing behavior at your Japanese competitors? And should this not be a tailwind relative to your prior assumptions? And Cathie noted some channel inventory correction as well impacting printer hardware. Is that now largely complete? Or is there more headwind in Q2?

So we have not yet seen material change from the Japanese competitors. I think many of our competitors have hedging strategies in place and it takes some time for movements in any given month to flow through to any other month. This is obviously something that we track very closely. We're continuously running price function value equations relative to our competitors. But at this stage, we just assume that the current environment is the new normal that we need to take those costs, nonrevenue-generating costs, out of the system. And that will allow us to place some marginal units.

And then from a channel inventory perspective on the hardware side, we are in a very healthy position. And so there shouldn't be any more channel inventory hardware units adjusted, that need to be adjusted. On the supply side, we are still slightly above our kind of targeted range. And so we do need some additional channel inventory correction in Q2, but we will be through that in -- by the end of the first half.

The hardware actions were very deliberate that we took here. And we said on the Q4 earnings call that we were looking to stabilize pricing in the market. Indeed, when you look at, on a constant currency basis, our ASPs were up sequentially. So indeed, we're doing what we said we would do then.

The next question will come from Toni Sacconaghi of Bernstein.

I think I also have one for Cathie and one for Dion. If I think about, Cathie, your capital return for this year at 75%, it basically implies that you'll continue paying the dividend and maybe there will be another $200 million in buybacks for the rest of the year. You've already done $800 million. Is that the right way to think about it? And a, why wouldn't capital return be higher? Why were the buybacks so uniquely concentrated in the first quarter? I think your trough in the stock was close to when you started going into the quiet period, so you clearly didn't bottom-ticket. Can you help us understand how to think about that capital return in the context of your original guidance? And then I have one for Dion.

Sure, Toni. So in terms of the math that you outlined at the beginning of your question, you are thinking about it correctly. In terms of your comment, we clearly didn't bottom-ticket. We put in place, at the beginning of the quarter, a 10b5-1 plan that covers us for every -- kind of the entire quarter, all the way through the earnings announcement. So we were buying based on our 10b5-1 in the market the entire time. So you're right, we didn't buy everything at the low, but we were buying continuously. In terms of doing more share repurchase, kind of our view is that capital allocation is important. Share repurchase is an important element of that and that we will continue to look at capital allocation on a returns-based basis. And that ultimately, in the big scheme of things, our investment-grade credit rating is very important to us. It's important to us on 2 dimensions. Our business is becoming more contractual and our customers, in some cases, they're demanding an investment-grade credit rating. In other cases, we just think it makes us more attractive. And then finally, wanting to make sure that we have the capacity and flexibility to take advantage of opportunities that might come up in the constantly evolving technology market.

I meant on the bottom-ticket that you basically concentrated 80% of your buybacks in the first quarter of the year and that, that was sort of the question on, was that done because you wanted the maximum leverage on EPS, was there a fundamental belief that the stock price was uniquely low, and I guess the question would be how could you possibly have that belief knowing that markets are unpredictable but the uniquely high concentration of buybacks in the first quarter of the year.

So Toni, we have the most dilution from employee benefit plans in the first quarter. And so that typically drives us to do more share repurchases at the front end of the year.

Okay. Dion, I wanted to just clarify and push you a little bit on supply. So when you guys talk about supply stabilizing at the end of 2017, that means that they will stop declining, so 0% growth or better. I just want to be sure I understand that. But more importantly, if I look at your hardware -- printer hardware revenues, they've declined for 18 out of the last 19 quarters. That's probably the best proxy for the first 2 boxes in your 4-box model, which is the installed base and the quality of the installed base, which is the function of revenue. If I think about the third part of your 4-box model, which is aftermarket share, you just conceded that aftermarket share actually declined this quarter. And my belief is, over the last 5 years, it's also gone down. So if I think about, in the fourth part of your 4-box model around the new platform, quite frankly, given that it's -- only applies to laser and that's less than half of your profits in IPG, I don't think it's big enough to move it. So I guess the question is what am I missing? I know the 4-box model sort of sounds very logical, and it is very logical. But when I systematically step through the pieces and say we've had 19 -- 18 out of 19 quarters of down hardware, aftermarket's going in the wrong direction, what am I missing that drives stabilization 6 quarters from now?

Yes. So the 4-box model is a predictive tool, and we use it extensively. It has a lot of complexity built into it. Not all units are created equally. We have -- we can place a particular unit in one demographic, place exactly the same unit in a different demographic. And it can yield an entirely different usage pattern, and we can have a different price associated with it. So when you think about all the permutations and combinations associated with that 4-box model, it is something that we focus on very carefully. And it shapes the way we place units, it informs how we price, and it even informs how we market. As we stated on last quarter's earnings, we expected the units to be down and that we're indeed down this quarter. Some of that was quite intentional, as we've already outlined. But characterizing the -- what I refer to as the new normal in a market environment where we think the currencies are going to continue to put downward pressure on pricing, what we structurally need to do is to take costs out of the system so that we can put marginal units back into the plan. So we are really focused on placing good units into the plan, those that are MPV-positive, taking costs out of our operations, particularly in the areas of nonrevenue-generating activities, and that will benefit us more in the second half than in the first half and that will enable us to put those units back in so it sort of addresses the first box. Managing those inventory levels was a key start to getting that done, and we did that in quarter 1. Then we said we have to turn to stimulating demand and driving price discipline into the market, and…

The next question will come from Kulbinder Garcha of Crédit Suisse.

I have just a couple of questions. The first one is just on the cost savings and the acceleration. Very simply, if we would look between fiscal year '15 and let's say, '17, Cathie, can you just tell us what the dollar cost savings number you hope to be on this kind of acceleration in the program that you mentioned? That's my first one. The second one is for Dion. Just on the supply side -- so sorry, on the market share gains that you hope to drive through in the Printing side, is that a mix shift back towards hardware and that hurts Printing, the IPG margins? Is that something you want us to take into account for a couple of quarters?

So let me start on cost savings. So accelerating the restructuring that we talked about at the Security Analyst from 3 years into this year has obviously a huge labor component to it. And we expect that the gross annual savings as a result of those, that pull-in, is going to be roughly $300 million once we get through the entire program by the end of this year. But I also want to call out that when we talk about material improvements in our nonrevenue-generating costs, we're not just talking about labor actions. In fact, in the short term, the value in terms of cost reduction is going to be more in the nonlabor area, which will provide savings on an ongoing basis, some significant savings in this year, in the second half, and then going into '17.

But you're not prepared to put a number around those nonlabor savings, Cathie?

So we don't on the nonlabor side. On the labor side, it's roughly $300 million in savings starting into '17.

So let me say, Kulbinder, that you remember, at the Security Analyst Meeting, we talked about $1 billion of productivity improvements that we were looking to take out of the business. With now a quarter under our belt, we are confident about our ability to achieve the $1 billion of productivity improvements. However, given the current market environment, it was very clear to both Cathie and I that, that was not enough and that's why we accelerated our restructuring, both in terms of headcount but also these other activities. And so what that means is that we're looking to create capacity to put in marginal units back into plan, but we'll always do that in a very balanced way, balancing profit and protecting the future of the business. So if we see opportunity to place good units, we absolutely will.

The next question will come from Katy Huberty of Morgan Stanley.

You spent a fair amount of time in this call talking about prioritizing ASPs and value placements on both PCs and printers. Certainly not a new strategy, but can you talk about whether that has accelerated since the separation? And given that margins in both businesses are declining despite that positive mix shift and the favorable component pricing environment, it just would be helpful to understand why you think that's the right strategy, given the negative impact of lost unit scale. Then I have a follow-up.

Okay. So well, let's first talk about the Personal Systems business. The -- if you look at the margin in the Personal Systems business, at the end of Q1, we delivered a 3.1% margin. It was down 0.6%, but the gross margin in that business was up slightly on a year-over-year basis. Because what was happening is that we had a significant currency headwind, 7 points of currency, and we had some opportunity but not, to the full extent of currency, to reprice. And so what this team really did, which was very positive, was that they managed the mix. And they managed the mix of the products and they also managed the attached, so that, in fact, ASPs were flatter, you could say up ever so slightly on a year-over-year basis. So the real pressure on the Personal Systems operating profit came from the volume declines and the pressure on the more fixed nature of the OpEx.

And all the while they did that whilst ensuring that our inventory was in very healthy positions. As Cathie referred to, I do refer to the whole PC business as a fish business. It's great when it's fresh. It makes you sick when it's off. And the ability to adjust to the market quickly is helped by the fact that our inventory was in pretty good position going into the quarter and is in pretty good position coming out of the quarter.

So what we're focused on doing across the company that we've talked about is obviously take -- reducing our nonrevenue-generating expenses. But we're also focused on continuing to variable-ize as much as possible our expense cost structure so that you don't lose this operating expense leverage when volumes are lighter. So that's the Personal side -- Personal Systems side. On the Printing side, really, the margin -- so we delivered a margin of 17%, down 1.8 points. And the pressure there was really around a very competitive pricing environment related to currency and then also just the strength of the dollar from a currency perspective that was a bigger headwind than the tailwind from supplies -- favorable supplies and hardware mix. And they also had struggled with -- or we also struggled with lots of operating expense leverage there, again, back to the fact that we've got to get our cost structure, our nonrevenue-generating cost structure down to operate in what we're calling the new normal. This is the environment in which we have to win and succeed.

So Dion, given what you've seen around the execution of moving to the higher-value segments and the impact on units, are you more or less married to that strategy?

Yes, I think the strategy is all about balance. You can't ever over-pivot towards the premium end of the range because then you lose scale across the business. You have to maintain a balance. I always maintained and have said for many years now that we were under-indexed in the premium parts of the market and it didn't mean that we would give up on the volume parts of the market, but we may just do better in the value parts of the market. I think, over the course of the last 3 years, in Personal Systems, Ron Coughlin and the team have done a tremendous job of moving up the stack, but at the same time, protecting our core position. And in Print, we're leveraging some amazing technology, with PageWide bringing Ink into the Office, the new JetIntelligence series, driving up the stack with multifunction printers, PageWide, Excel and new Graphics printers, is very much on strategy. But we have to protect the core as well.

Your next question will be from Shannon Cross of Cross Research.

I had a couple of questions as well. The first is on the balance sheet and use of cash, and that, I mean, you're at basically $3 billion net debt at the moment. You're generating a significant amount of cash, and you talked about getting back to the $2.9 billion of operating cash flow. So I guess my question is where the stock is at right now, why not be more aggressive with share repurchase, maybe lever up a bit? I think it seems like a good opportunity. It doesn't appear there any pending acquisitions that are sort of hanging out there. And given the end markets and the pressure you're seeing, is this an opportunity that's sort of giving itself to you, given some of the pressure that you've seen in earnings in that and what the stock price has done? And just sort of maybe, overall, how are you thinking about it? I know you want investment grade, but there's clearly some room before you start hitting up against that ceiling.

Yes. Look, I think, Shannon, we've been pretty clear on our capital allocation framework. We evaluate all investment opportunities against one another, ensuring that the choices we make are aligned to maximize risk-adjusted returns. And Cathie alluded to that on her earlier response. We've always said that share repurchase is a key part of the capital allocation priorities. We have a very disciplined framework in place to support the activity, including plans with valuation triggers. But indeed, there's other parts of the business that we need to invest in. I continue to believe in our strategy. I believe in our team. I believe in our partners and our future. We have a clear focus on the core. We have growth opportunity in mobility and graphics and in the A3 parts of the market that we'll enter in 2017 and a very exciting future around 3D printing and Immersive Computing. So is there value here from my vantage point? You bet there is, but it requires good old-fashioned hard work and discipline.

Okay. And then I guess that opens up to my next question, was to talk a little bit more about the opportunities in 3D and the copier, the A3 market. Sort of how are you thinking about it as you go through the, I guess, 2,600 people that need to be laid off over this year, how do you sort of cull those people while supporting the growth areas and keeping everything on track? And I would assume we're going to see 3D printing at Drupa based on some of the things we've seen on the web, but how do you -- we think about sort of that rollout since that's obviously coming before we get to the A3 initiative?

Yes, so look, we remain on track with both our 3D printing launch as well as our A3 product lineup. We're excited by those opportunities. We recognize that the A3 copier space is probably a shorter-term upside market. It's a $55 billion market where we have a very low market share, as you well know. And we're excited by entering that space. The 3D printing today is still relatively nascent as a market, but we believe we have groundbreaking disruptive technology that will address both the production and prototyping space of the commercial markets. We're on track. I was recently in Barcelona doing a review with the team where it was developed, and there's some super exciting stuff going on in here and we look forward to unveiling it at the appropriate time.

And real quickly, Shannon, when we talk about pulling forward approximately 3,000 headcount reductions, that's not in the core areas of investment. So it's not touching A3 or 3D. It's really focused on nonrevenue-generating costs in the core. It is -- we are protecting it, in fact, it was a mandate when we started working through the programs in December that we weren't touching R&D.

It's the prime directive. I think our portfolio is the best it has ever been. And that doesn't happen without investment, whether it's the work that Ron and the team are doing on Personal Systems or the work that Enrique Lores and his team are doing on Print and Steve Nigro in 3D printing. We've been very deliberate around ring-fencing the innovation agenda.

And the final question will come from Jim Suva of Citigroup.

And one question for Dion and one question for Cathie, and I'll just give them now. Dion, to use your example, a little bit about stale fish, stale fish in the kitchen, kind of what happens, in your experience, with the stale fish analogy? The pricing, the products that just get dumped in the trash that they would stink up the room for everybody. What happened when stale fish in excess PC inventory happened in the past? And for Cathie, you reiterated earnings per share, but you took free cash flow down by $100 million. And I understand Q1 was disappointing and free cash flow was negative, but it also seemed like a lot of the negative Q1 free cash flow was due to unfortunate timing of payables, which might see payback around that, could be we can revert in the quarter or so. So can you help bridge the gap of why free cash flow is down $100 million, yet earnings per share you reiterated?

Yes, so Jim, that's entirely due to the fact that we've pulled in the restructuring of approximately 3,000 people. So that's the cost of the incremental people in fiscal 2016. So if you look at it on a normalized basis, we're still at $2.9 billion to $3.2 billion for the year.

So -- and Jim, to answer your question on what happens in the fish business is those that have a lot of stale fish, it's very expensive, and those that have fresh fish tend to do better. And so you can take advantage of a situation where the channel inventory is relatively high, component prices drop. You're holding fresh inventory, you can pass through those savings and newer technology faster to your customers. And keeping the industry fresh is something that our customers are looking for, and that if you're out of position on inventory, that becomes very costly. So that's the implication. So unfortunately, we are out of time. And I thank everyone for joining. Clearly, we laid out our strategy at our Security Analyst Meeting and meeting the obligations and delivering the results that we outlined amidst a continued tough market backdrop. I think the team has delivered a clear strategy that leverages our strength and innovations to protect our core, to capture growth opportunities in natural adjacencies and capitalize on future opportunities in new markets. We're focused on execution, taking cost out of the business and delivering innovations that will amaze our customers and partners. So I hope to see some of you in Düsseldorf, at Drupa in just a few months, where we will showcase our leadership in the digital graphics market. I appreciate your support. I look forward to spending more time with many of you in person in the coming weeks and months ahead. Thank you.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.