CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC’S DAVID FABER SPEAKS WITH HEWLETT-PACKARD CEO MEG WHITMAN TODAY ON CNBC’S “SQUAWK ON THE STREET”

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FABER: THANKS VERY MUCH, CARL. OF COURSE, WELL, YOU CAN CERTAINLY GIVE THEM CREDIT PERHAPS FOR TRANSPARENCY, HEWLETT-PACKARD YESTERDAY LAYING OUT A BROAD PLAN FOR REMAKING THE COMPANY OF COURSE PART OF THAT WAS SETTING THE FINANCIAL BAR FAR LOWER FOR NEXT YEAR A YEAR THAT THEY’RE CALLING A FIX AND REBUILD YEAR. AS YOU SAID, THE STOCK TOOK QUITE A HIT ON THAT NEWS. WE ARE JOINED BY THE CEO OF HEWLETT-PACKARD, MEG WHITMAN JOINS US FROM HEADQUARTERS OF THE COMPANY IN PALO ALTO. MEG, AS ALWAYS, VERY MUCH APPRECIATE YOUR WILLINGNESS TO COME ON ESPECIALLY IN WHAT ARE SEEMINGLY VERY DIFFICULT TIMES. YOU AND I SAT DOWN A LITTLE MORE THAN A YEAR AGO WHEN YOU FIRST JOINED THE COMPANY. AND I GUESS MY FIRST QUESTION WOULD SIMPLY BE WHAT TOOK YOU SO LONG? A YEAR IS QUITE A WHILE IN THE HISTORY OF A COMPANY, CERTAINLY ONE THAT SEEMS TO BE IN SOME DISTRESS. WHAT TOOK YOU SO LONG TO DIAGNOSE THESE PROBLEMS AND REALLY LAY OUT THE VISION FOR HOW YOU’RE GOING TO TRY AND FIX THEM?

 

WHITMAN: WELL, YOU RECALL WHEN I TOOK OVER AT HP, IT WAS A COMPANY THAT HAD BEEN THROUGH PRETTY TURBULENT TIMES. I WAS THE THIRD CEO IN THREE YEARS. AND IT IS A HUGE COMPANY, SIX MAJOR BUSINESSES, OVER 320,000 EMPLOYEES IN 166 COUNTRIES. AND I NEEDED TO DIVE INTO EACH AND EVERY BUSINESS, TO UNDERSTAND EACH FUNCTION. I NEEDED TO MEET WITH CUSTOMERS AND PARTNERS AND EMPLOYEES TO REALLY TAKE STOCK OF THE CHALLENGES THAT WE FACE. SO THAT’S — YOU KNOW, YESTERDAY, AFTER A YEAR’S WORTH OF WORK, I HAD PEELED THE ONION AND CAME OUT AND TOLD THE INVESTMENT COMMUNITY, HERE’S OUR OPPORTUNITIES. HERE’S THE CHALLENGES, WHICH PRESENT OPPORTUNITIES. AND HERE’S THE PRODUCTS THAT WE’RE GOING TO REBUILD HP ON. AND WE TALKED ABOUT OUR PRODUCTS IN OUR SERVER DIVISION, IN OUR PC BUSINESS, IN OUR PRINTING BUSINESS AND LAID OUT THE TURNAROUND PLAN WHICH I’VE SAID FROM THE BEGINNING WAS A FOUR OR FIVE-YEAR PLAN.

 

FABER: YOU KNOW, MEG YESTERDAY YOU ALSO USED THE WORD “STABILIZATION,” REFERRING TO AT LEAST YOUR JOB, YOU SAID, NUMBER ONE WAS TO STABILIZE THE COMPANY. LOOKING AT THAT STOCK PRICE, IT DOESN’T SEEM AS THOUGH IT’S BEEN STABILIZED. WHAT GIVES YOU THE CONFIDENCE, AND ALSO YOU REPORTED NUMBERS YESTERDAY THAT SHOWED DECREASES IN REVENUES IN A COUPLE OF KEY AREAS. WHAT GIVES YOU THE CONFIDENCE THAT YOU HAVE STABILIZED HP?

 

WHITMAN: WELL, WHEN I REFERRED TO STABILIZATION WHEN I FIRST CAME TO HP, I WAS TALKING ABOUT RESTORING CONFIDENCE IN OUR EMPLOYEE BASE, IN OUR CUSTOMER BASE BECAUSE, OF COURSE, WE HAD JUST ANNOUNCED THAT PERHAPS WE WERE SPINNING THE PSG DIVISION OUR PERSONAL COMPUTER DIVISION, THAT WE JUST BOUGHT AUTONOMY THAT WE WERE SHUTTING DOWN WEB OS. I JUST HAD TO PROVIDE A STEADY HAND ON THE TILLER AND REAFFIRM THE BUSINESSES THAT HP WAS IN THAT WE’RE COMMITTED TO THE PRINTING BUSINESS, THAT THE CORE OF THIS COMPANY IS A HARDWARE COMPANY, SERVER, STORAGE AND NETWORKING AND THEN LAY OUT THE ROLE OF SOFTWARE AND SERVICES IN OUR OVERALL PORTFOLIO. SO I THINK WE’VE DONE A GOOD JOB OF LETTING PEOPLE KNOW WHAT BUSINESSES WE’RE IN, THE PATH FORWARD. NOW, FROM A STOCK PRICE POINT OF VIEW, WE HAVE TO DELIVER THE RESULTS. AND WE HAVE TO DELIVER THE PRODUCTS THAT ARE GOING TO TURN THIS COMPANY AROUND. AND NOW I THINK WE’VE GOT 320,000 EMPLOYEES WHO UNDERSTAND WHAT THE CHALLENGES ARE. AND AS I’VE SAID, I WOULD NOT BET AGAINST 320,000 HP EMPLOYEES WHEN WE GET EVERYONE MARCHING IN THE SAME DIRECTION, YOU’D BE AMAZED WHAT THIS GROUP OF PEOPLE CAN DO. SO I’M CONFIDENT THAT 2013 WILL BE THE BOTTOM OF, YOU KNOW, THE TURNAROUND. AND THEN YOU CAN LOOK FORWARD, I THINK, TO GOOD GROWTH IN 2014 AND 2015 AS THOSE PRODUCTS KICK IN, THE INVESTMENTS THAT WE’RE MAKING IN THINGS LIKE I.T., SYSTEMS, IN OUR SALES ORGANIZATION, IN TRAINING. THOSE THINGS WILL START TO KICK IN. AND I REALLY DO THINK 2014′s GOING TO BE QUITE A BRIGHT YEAR FOR HP.

 

FABER: YOU KNOW, MEG, THERE ARE SOME PEOPLE OUT THERE WHO DON’T SHARE YOUR CONFIDENCE WHEN IT COMES TO TWO KEY AREAS OF THE COMPANY. YOU MENTION THEM, OF COURSE, PRINTING AND PCs. THEY WATCHED THE MOVEMENT TO TABLETS AMONGST SO MANY PEOPLE, PARTICULARLY THE YOUNGER GENERATION, AND WHAT THEY AT LEAST CLAIM IS A LACK OF PRINTING ON THEIR PART. INSTEAD OF TAKING HOME DOCUMENTS, YOU TAKE HOME YOUR TABLET, YOU DON’T PRINT. WHAT GIVES YOU THE CONFIDENCE THAT THIS CAN CONTINUE TO BE AN IMPORTANT COMPONENT OF THIS COMPANY GIVEN THESE SIGNIFICANT CHANGES THAT ARE TAKING PLACE IN TECHNOLOGY?

 

WHITMAN: YEAH. WELL, FIRST OF ALL, I THINK THE DESIRE FOR PEOPLE TO COMPUTE, TO CREATE, TO SHARE, TO COMMUNICATE IS ACTUALLY NOT SHRINKING. IT’S GROWING. AND SO THE PERSONAL COMPUTING DEVICES, I THINK, ARE GOING TO CONTINUE TO GROW. AND, OF COURSE, YOU KNOW, EVEN THE CLASSIC NOTEBOOKS, OUR NEW THIN AND LIGHT NOTEBOOK LIKE THE SPECTER XT, WE’VE HAD TREMENDOUS RESPONSE TO THAT. SO WE’RE GOING TO HAVE A FULL LINE OF OFFERINGS FROM WORK STATIONS TO DESKTOPS TO NOTEBOOKS. AND THEN, OF COURSE, WE’RE ENTERING INTO THE TABLET CATEGORY, TOO, BUT NOT AS JUST A SIMPLE TABLET, A CONVERTIBLE WHERE YOU CAN HAVE THE BENEFITS OF A LAPTOP PLUS THE BENEFITS OF A PURE TABLET. AND THEN ONE THING I’M VERY EXCITED ABOUT IS OUR ELITE PAD WHICH IS THE FIRST TABLET DESIGNED SPECIFICALLY FOR THE ENTERPRISE. IT HAS SERVICEABILITY. IT HAS WHAT WE CALL SMART JACKETS THAT ALLOW YOU TO CUSTOMIZE THAT TABLET FOR YOUR INDUSTRY. WHEN YOU PUT THE SMART JACKET ON, IT GOES FROM THE TEN-HOUR BATTERY LIFE THAT’S BUILT INTO THE TABLET TO ANOTHER TEN HOURS OF BATTERY LIFE IN THE SMART JACKET. SO WE’RE IN THAT BUSINESS, TOO, NOW. AND I THINK WE’RE GOING TO DO VERY WELL THERE. AND THEN PRINTING, YOU KNOW, LISTEN, COMMERCIAL PRINTING CONTINUES TO GO UP. SOME SECULAR TRENDS IN CONSUMER, BUT WE’VE GOT SOME NEW PRODUCTS COMING IN PRINTING, TOO, AS WELL.

 

JIM CRAMER: MS. WHITMAN, I TRULY APPRECIATE YOU COMING ON THE SHOW. I CANDIDLY HAVE BEEN VERY CRITICAL OF THE COMPANY. I WOULD LIKE TO KNOW, IN AN EXCELLENT INTERVIEW, TWO DAYS, MARIA BARTIROMO, WITH LARRY ELLISON, CEO OF ORACLE, HE MADE IT CLEAR THAT THIS COMPANY WAS DOING POORLY UNTIL MARK HURD CAME IN. THEN WHEN HE LEFT, THE COMPANY WAS FINISHED. WHAT DO YOU THINK OF MR. ELLISON’S ANALYSIS?

 

WHITMAN: LISTEN, YOU KNOW, THERE’S BEEN A LOT OF CHANGE AT THE TOP OF HP, A LOT OF ACQUISITIONS OVER THE YEARS. YOU KNOW, ONE THING PEOPLE DON’T REALLY RECOGNIZE IS OVER THE LAST TEN YEARS WE’VE GONE FROM A PRINTING COMPANY TO A DIVERSIFIED TECHNOLOGY COMPANY. TODAY 43% OF OUR PROFITS COME FROM OUR ENTERPRISE SERVICES GROUP, SERVERS, STORAGE AND NETWORKING AND THE SERVICES BUSINESS THAT GOES ALONG WITH IT. SO LISTEN, WE’VE GOT A GREAT SET OF ASSETS HERE. WE UNDERSTAND THE PROBLEMS. AND WE’RE ABOUT FIXING THEM. AND I THINK IT’S A GREAT OPPORTUNITY. YOU KNOW, THESE ARE — I BELIEVE THIS IS ALL VERY FIXABLE. IT’S GOING TO TAKE TIME. THERE ARE NO SILVER BULLETS. IT’S BASIC BLOCKING AND TACKLING. WE KNOW HOW TO DO THIS. NOW WE’VE GOT A ROAD MAP AND WE’RE GOING TO GO DO IT.

 

CRAMER: MS. WHITMAN, WHAT DO YOU SAY ABOUT THE NEXT GENERATION? THE NEXT GENERATION WANTS APPLE. I DON’T SEE PEOPLE BEGGING FOR HP PCs, I DO NOT SEE PEOPLE SAYING I’M WAITING FOR THE TABLET. I ALSO NOTICED MICROSOFT IS GOING AGAINST YOU. YOU’RE SUPPOSED TO BE A GOOD CUSTOMER OF THEM. WHAT DO YOU SAY TO THE NEXT GENERATION WHO SAYS LISTEN, YOU KNOW WHAT? FORGET APPLE. STEVE JOBS, HE’S GONE, IT DOESN’T MATTER, STICK WITH HEWLETT!

 

WHITMAN: LISTEN, WE SHIP TWO PCs EVERY SECOND. THIS IS AN ENORMOUS BUSINESS. WE’RE SEEING GROWTH IN A LOT OF AREAS. WE HAVE AN ENTIRELY NEW DESIGN LINEUP. WE HAVE PUT REAL EMPHASIS ON DESIGN. AND THIS IS SOMETHING HP DOES QUITE WELL. WE HAVE TERRIFIC PRODUCT ENGINEERING. NOW MARRIED WITH A DESIGN ORGANIZATION. I THINK WE’VE GOT A REALLY GOOD SHOT HERE, AND WE’VE GOTTEN GREAT RESPONSE TO THESE DEVICES. YOU KNOW, LISTEN. WE ARE ONE COMPETITIVE COMPANY. WE NOW HAVE A SHARP COMPETITIVE FOCUS. WE KNOW WHAT WE HAVE TO DO TO COMPETE. AND WE’RE GOING TO DO IT. I WOULDN’T BET AGAINST US. I WOULDN’T BET AGAINST THE TECHNOLOGY THAT THIS COMPANY HAS IN THE PIPELINE AND OUR COMMITMENT TO DELIVERING GREAT PRODUCTS AND TO MEETING CUSTOMER NEEDS. ONE THING I’LL TELL YOU ABOUT HP. THROUGH ALL THE CHANGE AT THE TOP, THROUGH ALL THE CRAZINESS, OUR PEOPLE HAVE DELIVERED FOR CUSTOMERS. WE WILL DO ANYTHING FOR CUSTOMERS. AND I THINK THAT’S A GREAT STRENGTH OF THE COMPANY THAT WE’RE GOING TO BUILD ON.

 

MELISSA LEE: MEG, CAN YOU ACKNOWLEDGE THAT PERHAPS FROM AN INVESTOR STANDPOINT, THERE MAY BE A DOZEN OF REASONS TO NOT BE AN INVESTOR IN HP RIGHT NOW. YOUR FIVE YEAR PLAN IS LAID OUT BUT THE PAYOFF IN FIVE IS REVENUE GROWTH IN LINE WITH GLOBAL GDP, AND ALSO YOU TOOK DOWN YOUR FREE CASH FLOW ESTIMATES CURRENTLY. SO IT DOESN’T SEEM FOR INVESTORS — GIVE US THE REASON WHY INVESTORS SHOULD BE INVESTING IN HP AND NOT SOME OF THE COMPETITORS THAT JIM HAD MENTIONED, WHICH SEE BRIGHTER GROWTH PROSPECTS IMMEDIATELY.

 

WHITMAN: SO, YOU KNOW, I CAN’T GIVE ADVICE TO OUR INVESTORS. THEY’D HAVE TO MAKE THEIR OWN DECISIONS. HERE’S WHAT I SEE AT HP. I SEE AN INCREDIBLE COMPANY WITH A LOT OF STRENGTHS THAT’S HAD SOME PRETTY HARD TIMES, THAT HAS SOME HEADWINDS FROM THE MACRO ECONOMIC ENVIRONMENT, SOME BIG MARKET CHANGES, BUT YOU HAVE A MANAGEMENT TEAM NOW WHO HAS A HANDLE ON THE PROBLEMS, WHO KNOWS WHAT TO DO. WE’VE GOT A PLAN TO FIX THIS COMPANY. AND I THINK INVESTORS HAVE TO DECIDE, GEE, DO THEY THINK THAT HP CAN TURN THIS SHIP AROUND? DO THEY BELIEVE IN THE MANAGEMENT TEAM? DO THEY BELIEVE IN OUR EMPLOYEES? DO THEY BELIEVE THAT CUSTOMERS WANT HP TO WIN, WHICH I CAN TELL YOU THEY DO. AND DO THEY BELIEVE IN THE PRODUCT LINEUP? WE SPENT QUITE A BIT OF TIME YESTERDAY AT OUR ANALYSTS DAY TALKING ABOUT THE COMING PRODUCTS IN EACH OF OUR DIVISIONS. WE SHOWED OUR NEW PC LINEUP. WE SHOWED — TALKED ABOUT OUR MULTIFUNCTION PRINTERS. WE TALKED ABOUT INK IN THE OFFICE, INK ADVANTAGE. WE TALKED ABOUT OUR NEW, VERY ENERGY EFFICIENT ARM-BASED SERVERS THAT I THINK COULD REVOLUTIONIZE THE SERVER MARKET. WE TALKED ABOUT THREE PAR AND STORAGE AS WELL AS WE’RE THE LEADER, REALLY, NOW IN THE DEVELOPMENT OF SDN, SOFTWARE-DEFINED NETWORKING. SO PRODUCTS ARE GOING TO BE A REALLY IMPORTANT PART OF HOW WE BRING HP BACK. AND INVESTORS GOT TO LOOK AT THAT WHOLE STORY AND SAY, GEE, DO I THINK THIS IS SOMETHING THAT OVER THE COUPLE YEARS I CAN MAKE A LOT OF MONEY ON?

 

QUINTANILLA: MEG, YOU TALK SO MUCH ABOUT — IT’S CARL, BY THE WAY — YOU TALK SO MUCH ABOUT CHANGE IN THE COMPANY. ONE COMPLAINT INVESTORS CONTINUE TO LODGE, THOUGH, IS THAT THERE HAS NOT BEEN LARGE-SCALE CHANGE ON THE BOARD WHICH FOR A LONG TIME WAS THE CAUSE OF A LOT OF UNCERTAINTY AND SKEPTICISM REGARDING THE COMPANY. DO YOU BELIEVE THE CHARACTER OF THE BOARD HAS CHANGED? AND IF SO, HOW GIVEN THAT THE PLAYERS — THERE HASN’T BEEN A TURNOVER ON A LARGE SCALE.

 

WHITMAN: SO THERE HAS BEEN TURNOVER ON A LARGE SCALE ON OUR BOARD. WHEN RAY LANE CAME IN AS CHAIRMAN IN JANUARY OF 2011, SINCE THAT TIME, HALF THE BOARD IS NEW. AND HALF THE BOARD HAS LEFT. SO WE HAVE 10 OR 11 MEMBERS OF THE BOARD. HALF OF THEM ARE NEW. AND THEY ARE TERRIFIC INDIVIDUALS IN THEIR OWN RIGHT. MANY OF WHOM HAVE RUN LARGE COMPANIES, WHO DEEPLY UNDERSTAND TECHNOLOGY. SO I’M VERY COMFORTABLE WITH THE MAKEUP OF OUR BOARD TODAY. IT HAS BEEN A WHOLESALE CHANGE IN THE LAST YEAR AND A HALF.

 

FABER: MEG, IT’S DAVID BACK IN LARUE, TEXAS, WHERE OF COURSE I AM. YOU ARE HEADING INTO THIS FIX AND REBUILD YEAR WITH WHAT YOU CLAIM WAS A WORSENING MACROECONOMIC ENVIRONMENT. EUROPE IS VERY SLOW. YOU NOTED CHINA IS SLOW. DOES THAT GIVE YOU PAUSE GIVEN YOU ARE, AGAIN, HEADING INTO A VERY IMPORTANT YEAR FOR THIS COMPANY?

 

WHITMAN: IT DOES. AND IT’S PART OF, YOU KNOW, THAT UNDERSTANDING OF THE MACROECONOMIC ENVIRONMENT. DID INFLUENCE OUR GUIDANCE FOR 2013. IT’S VERY MUCH A FACTOR THAT, YOU KNOW, IS ON MY MIND. WE HAVE A BIG EXPOSURE TO EUROPE. SOME OF THE MARKETS IN EUROPE ARE OUR STRONGEST MARKETS. WE HAVE VERY BIG SHARES. AND SO WE HAD TO TAKE THAT INTO ACCOUNT AS WE GAVE GUIDANCE FOR 2013. SO WE TOOK INTO ACCOUNT THE MACROECONOMIC ENVIRONMENT, THE MARKET CHANGES THAT ARE UNDER WAY, THE CHALLENGES WE HAVE INTERNALLY, AND THE PRODUCTS THAT WE’RE BRINGING TO MARKET AND, SAID, YOU KNOW, WHAT DO WE THINK IS A REASONABLE ACHIEVABLE GOAL THAT WILL ALLOW US TO MAKE THE INVESTMENTS THAT WILL SET THIS COMPANY UP FOR A GREAT 2014 AND BEYOND.

 

FABER: MEG, IS HP SIMPLY TOO BIG STILL? YOU MENTIONED DURING THIS INTERVIEW, 320,000 EMPLOYEES. IT’S ALMOST AMAZING TO THINK A COMPANY WITH LESS THAN A $30 BILLION MARKET VALUE HAS THAT MANY EMPLOYEES, OF COURSE, YOU HAVE A HUGE REVENUE LINE AS WELL. YOU HAVE 2100 DIFFERENT SKEWS OF LASER PRINTERS. IS THE COMPANY SIMPLY STILL TOO LARGE FOR YOU TO MANAGE AND FOR IT TO SUCCEED?

 

WHITMAN: I DON’T THINK SO. YOU KNOW, I HAVE NOW SPENT, AS I SAID, A YEAR AT THIS COMPANY. I BELIEVE THAT EVERY SINGLE OPERATING DIVISION OF THIS COMPANY PLAYS A ROLE. AND CUSTOMERS REALLY BELIEVE THAT WE HAVE A UNIQUE ROLE TO PLAY IN SUPPLYING THEM WITH TECHNOLOGY. WE ARE THE ONLY COMPANY THAT CAN GO FROM THE DESKTOP TO THE DATA CENTER, FROM HARDWARE TO SOFTWARE, TO SOLUTIONS TO SERVICES. AND I’LL TELL YOU AN INTERESTING STORY. DO YOU REMEMBER LAST YEAR WHEN WE SAID WE WERE GOING TO SPIN OFF THE PC BUSINESS OR WE WERE THINKING ABOUT IT? AND THE CUSTOMERS CAME OUT AND SAID NO, WE WANT HP TOGETHER. WE THINK YOU ARE STRONGER TOGETHER. THEY WERE QUITE UNSETTLED BY THE FACT THAT WE MIGHT SPIN OFF PART OF THIS COMPANY. SO MY BELIEF IS WE ARE BETTER TOGETHER. IF WE CAN MAKE EACH OF THESE BUSINESS UNITS FUNCTION BEAUTIFULLY ON THEIR OWN RIGHT AND THEN LINK IT TOGETHER IN OFFERINGS LIKE CONVERGE CLOUD, SECURITY, THE ABILITY TO COMBINE OUR SOFTWARE AND OUR, YOU KNOW, SERVER STORAGE AND NETWORK BUSINESS IN UNIQUE WAYS, I THINK WE BRING SOMETHING VERY NEEDED IN THE MARKETPLACE, AND CUSTOMERS TELL ME THAT EVERY SINGLE DAY.

 

FABER: YOU EVER HAVE ANY SECOND THOUGHTS ABOUT TAKING THE JOB, MEG?

 

WHITMAN: NO, I DON’T. I COME IN EVERY MORNING – THIS IS A GREAT TIME TO BE IN TECHNOLOGY, A GREAT TIME TO BE AT A COMPANY LIKE HEWLETT-PACKARD. LISTEN, WE’VE GOT A LOT OF WORK TO DO, BUT WE KNOW WHAT TO DO. AND THE THING THAT, YOU KNOW, I GET JOY OUT OF EVERY SINGLE DAY IS OUR EMPLOYEES. THIS IS ONE GREAT GROUP OF PEOPLE. AND I THINK WITH CLEAR DIRECTION, WITH A GREAT PRODUCT LINEUP, WITH THE INVESTMENTS THAT WE’RE MAKING IN SYSTEMS AND TECHNOLOGY TO MAKE IT EASIER TO WORK AT HP, I THINK WE’RE UNSTOPPABLE. WE’VE GOT A LOT OF WORK AHEAD. 2013 IS GOING TO BE A TOUGH YEAR. BUT I FEEL GOOD ABOUT THE PLAN WE’VE LAID OUT, THE PRODUCTS WE HAVE IN THE PIPELINE AND THE CUSTOMERS WHO WANT HP TO WIN.

 

FABER: WELL WE WILL BE FOLLOWING IT CLOSELY. AS ALWAYS, WE APPRECIATE YOUR WILLINGNESS TO UPDATE US, MEG WHITMAN CEO OF HEWLETT-PACKARD.

CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC’S DAVID FABER SPEAKS WITH HEWLETT-PACKARD CEO MEG WHITMAN TODAY ON CNBC’S “SQUAWK ON THE STREET”