Apotheker Girds for 'Another Tough Quarter' at Hewlett-Packard

The company's existing headcount plans are "unaffordablegiven the pressures on our business," Apotheker wrote in theMay 4 memo to deputies, including Todd Bradley, executive vicepresident of the personal systems business, and Chief FinancialOfficer Cathie Lesjak. The memo was obtained by Bloomberg.

"Q3 is going to be another tough quarter, one in which wewill be driving hard for revenue and profit," Apotheker wrote."We have thoroughly no room for profitless revenue or anydiscretionary expenditures."

Pall overApotheker's first quarter as CEO

Hewlett-Packard's disappointing forecast cast a pall overApotheker's first quarter as CEO and underscored the dualchallenges he faces. Hewlett-Packard's reliance on home-computersales leaves the company vulnerable to a consumer slump, whileits services unit needs acquisitions to take advantage of ashift to cloud computing.

The company is as well shuffling its executive ranks. It hiredMartin Homlish as chief marketing officer April 19. Homlish hadoverlapped with Apotheker at SAP AG, where Apotheker was CEOfrom 2009 until his ouster last February. The previous day, HPnamed Jan Zadak as head of business computing sales, replacingTom Hogan, who is departing.

The company's emphasis on higher-margin businesses

Apotheker is stepping up the company's emphasis on higher-margin businesses, including servers, storage computers andsoftware, and lessening its dependence on PCs, said Marshall,who has a "buy" recommendation on Hewlett-Packard.

Apotheker, who took over Nov. 1, outlined his strategy forthe first time on March 14, announcing a deeper push intosoftware and the expanding market for computing delivered viathe Web. The company is starting a cloud-computing service thatwill let developers create applications for consumers andbusinesses that run on HP servers, Apotheker said at that time.