Obviously, FX stabilizes or slightly improve, that full year guidance implies there is some potential upside. But also, it’s going to come down to the supply availability, as I just made the comments early on. In terms of the free cash flow and the working capital, I will pass it to Tarek.
Tarek Robbiati: Yes. Well, thank you, Antonio, and thank you, Toni. So, our free cash flow for fiscal year ’23 is going to be driven, obviously, by our earnings, but also reduction in restructuring expense, and you will observe already between ’21 and ’22 when you have a chance to look at our 8-K filing that restructuring expense is dropping quite considerably. And that trend will continue in FY23 relative to FY22. And the third variable to our free cash flow calculation is working capital, right? So far, inventory levels have reduced between Q4 and Q3 in the amount of approximately $400 million. We believe that inventory levels have peaked and we’re going to work through our order book to continue to deliver on these orders and therefore, this will reduce our inventory levels.
At the same time, if the demand remains as steady as we’re seeing it, we’ll probably need to continue purchases moving forward. So, I feel comfortable at this stage with the guidance we gave you on free cash flow of $1.9 billion to $2.1 billion, $2 billion at the midpoint. Let’s see how the year plays out, and we will think about giving you more color on how much free cash flow we can generate within that guidance or possibly more.
Operator: The next question will come from Aaron Rakers with Wells Fargo. Please go ahead.
Aaron Rakers: Yes. Thanks for taking the question. Can you hear me?
Antonio Neri:
Aaron Rakers: Sorry, guys. I appreciate taking the questions. Congratulations on the solid results. I want to go back to kind of the Compute side of the business. As we look at the backlog dynamics and the commentary that you’ve already given. I’m curious of how you guys see component price deflation factoring into your expectations as we move forward. Put another way, is there — how do you — how does the Company operate as far as passing through if it’s memory cost deflation and so on and so forth. How do we think about the progression of that as you think about the Compute business going through fiscal ’23?
Tarek Robbiati: Yes. So, thanks for asking the question, Aaron. You know that we have posted in Q4 an operating profit margin in Compute at 14.7%, which is the highest it’s ever been, and it’s higher than the outlook we guided you all at SAM, long-term OP margin in Compute of 11% to 13%. And the reason why we have that difference is that we believe as supply continues to ease, there will be the need for us to adjust our pricing down to continue to grow the business moving forward. So, the level of — at which the AUPs are at today will come down as we pass on the reduction in costs from commodities, DRAMs in particular. We’re starting to see some of this, but it’s early days. And what’s a very, very important Compute on the way up, just like on the way down, is to be extremely reactive and dynamic with our pricing.
And we have now the ability to do so globally to push changes in our list prices through our ERP system over a weekend, it needs to be to react to changes in commodity prices and what we’re seeing in the competitive environment. So, we remain with our business unit of Compute and the management team there extremely focused on competitive pricing dynamics because for us, it’s really critical as we foreshadowed to you that we maintain scale in Compute and continue to capture the lion share of the value in the industry, which we are doing today.
