And again, we will discuss this more in detail in a few weeks.
Toni Sacconaghi: Thank you. And then if I could just follow up, it sounds like the demand environment is pretty challenging, and the pricing environment is pretty challenging. And yet the margins that you’re experiencing in both businesses and that you’re guiding for in Q4 are actually above what your longer-term targets are. And so I was wondering if you could reconcile that. And are those targets too low for printing and for PCs? Or what — why in the face of pricing pressure and volume pressure are you not seeing margins go down into the range? And what are the trigger points for margins going back down into the range on Print and more in the middle of the range on PCs?
Marie Myers: Hey, Toni. Good afternoon. It’s Marie. So why don’t I go ahead and comment on the margin ranges for both business and sort of unpack some of the drivers there. But first of all, I’d start out by saying you are seeing some of the benefits that we’ve spoken about today and in prior calls of the Future Ready transformation. As we’ve said in the past, we do expect to see those savings flow through both cost of sales and OpEx. And frankly, I think you’re seeing the benefits of that in the rate. But obviously, there are some nuances by business. So I’ll just unpack it quickly, so to give you that detail. In terms of Personal Systems, we are expecting to see quarter-on-quarter, sequentially, some gradual improvement in pricing as we start to see some of that normalization of CI.
So there is a factor of that in the rate as well, combined with the impact of lower commodity costs and then both structural and operating costs that we spoke about earlier. And obviously, that’s offset by some of the enterprise softness. With respect to Print, it is a combination of both strategy and execution. We’ve got the portfolio rebalancing. I think we talked a little bit about that earlier with Shannon, plus honestly, pricing discipline and then the cost management from our transformation. So it’s all those factors combined, but you can see there that certainly, cost is a key element. And then I think from a — in terms of the long term, we’re still very confident that for Print, the 16% to 18% is the right long-term rate, and that’s because there are a number of different forcing functions there, particularly as you look at the guidance that we’ve given about supplies in terms of the revenue decline there, the low to mid-single digit and plus a much more competitive sort of pricing in that we’ve seen in Consumer, and some of that is even evidenced in enterprise more recently.
But I think we’re overall confident that the rates are the right rates and the right ranges for us for both Personal Systems and Print. And I’ll turn it to Enrique if he has anything else to add.
Enrique Lores: Not much to add, Marie. You covered it well. Maybe the last comment is, as we have mentioned before, we don’t manage the businesses for the rates. We manage them for operating profit dollars. And this is really what we care the most. We provide ranges because we know it’s important for all of you to be able to model, but our goal is to grow operating profit dollars for the company.
Toni Sacconaghi: Thank you.
Enrique Lores: Thank you.
Operator: Your next question comes from the line of Samik Chatterjee with JPMorgan. Your line is open.
Samik Chatterjee: Hi, thanks for taking my question. I guess if I can start off with a question more in relation to the moderation of the sequential improvement into 4Q that you’re outlining because of the macro. And maybe if you can flesh out how to think about how much of that impact is volume- or unit-driven versus a more promotional environment in the segments than you anticipated at this time. Just trying to get a sense of how much of this relates to sub-seasonal PC volume growth versus maybe just a more promotional environment than you were anticipating. And I have a quick follow-up. Thank you.
Enrique Lores: Yeah, perfect. Thank you. And really, thank you for the question because this was one of the most important things we wanted to clarify in the call. Let me start by saying that the biggest driver of the change of guide we have made is that we are not expecting PC prices to recover sequentially as much as we were expecting one quarter ago. And this is really driven by what do we think is the channel situation at the market level. Because even if we have mostly normalized our channel inventories, our estimate is that the industry continues to have significant channel inventory. And therefore, we will continue — we need to continue to expect aggressive prices, aggressive promotions through Q4. And this is really what is the major driver behind that. There are other changes that maybe Marie, you want to explain as well?
Marie Myers: Yes, absolutely. So why don’t I just give a little bit more context in terms of what Enrique commented on, Samik. I think if you think about the Q4 guide, obviously, the macro is in there and we’ve talked about that, I think, in our prepared remarks around those headwinds that we’ve seen, including the sluggish recovery in China. But in addition, just in terms of Personal Systems, it’s really — the way to think about it is the market size and the opportunity. And it’s driven by sort of both ASP pressure that we talked about in terms of that CI and then also the softer demand that we’ve seen in the enterprise. And then finally, there’s also some pressure on the Print business just in terms of the enterprise softness, and that’s really in industrial where we’re seeing today just elongated sales cycles due to that pressure.
Enrique Lores: So let me maybe add two final things. First of all is even if our expectation is that most of these changes are really temporary, we are not standing still, and this is why we mentioned that we are going to be accelerating some of the Future Ready cost reductions to compensate for this. And then to close, I think it’s also important to remember that despite of this change, we expect the performance of the company to improve once more sequentially Q4 to Q3, like we have done Q3 to Q2 and as we did Q2 to Q1. I think that’s important to have in mind.
