HP Rises as Profit Tops Estimates; 27

Hewlett-Packard's forecast for third-quarter profit wasless than analysts predicted, as the company grapples withslower demand for printers, services and data-center equipment.The job cuts, which will come through firings and earlyretirement offers by October 2014, will generate annual savingsof as much as $3.5 billion. Many of the employee cuts will comein the ailing enterprise services group, which manages datacenters and provides information-innovation consulting.

"Every business unit, every function and every region hasa role to play here," she said. The company raised its profitforecast for the year because it will begin to see cost savingsin the fiscal fourth quarter, Lesjak said.

The job cuts will pare Hewlett-Packard's workforce of349,600. The company's enterprise services business expandedwhen Hewlett-Packard bought Electronic Data Systems Corp. for$13.2 billion in 2008.

The unit competes with International Business MachinesCorp., Infosys Ltd. and others in the market for managingcompanies' IT operations. But the growth in the services markethas shifted away from the labor-intensive outsourcing contractsthat made up most of EDS's sales, the company has said.

Customers want help modernizing business applications,retooling data centers for Internet-delivered cloud-computingsoftware, and analyzing reams of data, and Hewlett-Packarddoesn't have enough experts in those areas to win deals, formerCEO Apotheker and other executives have said.

The PC market

In the PC market, Hewlett-Packard is fighting Apple Inc.'srising market share for its Mac computers and iPad tablet.Hewlett-Packard's report follows No. 3 PC maker Dell Inc.'sforecast yesterday for lower-than-projected sales for thequarter ending in July, as demand for smartphones and tabletcomputers erodes PC sales.

Tablet sales are cutting into those of traditional laptops:118.9 million tablet devices will be sold in 2012, almostdoubling from 2011, according to market-technology firm GartnerInc., with Apple accounting for 61.4 percent of the market. PCshipments worldwide will rise 4.4 percent to 368 million thisyear, Gartner estimates.