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By Ian Fried, 21 May 2003 09:42

NEWS Buoyed by profit improvements in its computing businesses, Hewlett-Packard on Tuesday reported second-quarter earnings and revenue that topped analysts' expectations. However, on a conference call with analysts, HP CEO Carly Fiorina said that the company plans to eliminate thousands more jobs over the next six months. The company has already axed 16,600 jobs in the past year, out of the 17,900 cuts planned after its May 2002 acquisition of Compaq Computer, Fiorina said. In addition to the remaining merger-related cuts, HP said it trimmed 2,300 additional jobs last quarter and plans to chop 3,500 more by October - including 1,200 in its high-end computing business. At the same time, it intends to add 4,000 jobs related to recent outsourcing wins and is giving raises to its employees for the first time in two years. "Although we are pleased with the (progress) of our enterprise systems business, we still have more work to do," Fiorina said, adding that the services industry is also seeing weak demand. HP said it earned $659m, or 22 cents per share, on revenue of $18bn for the three months ended 30 April. In the same quarter a year ago, the company earned $252m, or 13 cents per share, on revenue of $10.6bn. However, those earlier results exclude the performance of Compaq. Excluding certain charges, HP said it would have earned 29 cents per share. On that basis, analysts were projecting earnings of 27 cents per share on revenue of $17.7bn, according to earnings tracking firm First Call. In February HP forecast earnings of 27 cents per share, in line with what analysts were projecting at the time. "One year after the merger, we've reduced structural costs by $3.5bn on an annualised basis. Our business model is generating a more balanced revenue and profit mix, and our operating cash generation capabilities - more than $2.5bn this quarter - are proving to be stronger than ever," Fiorina said in a statement. The technology giant did not give specific guidance for the current quarter, but said it was comfortable with consensus estimates that it would have revenue of $36.4bn and per share earnings of 62 cents, excluding charges, in the second half of the fiscal year. "We see no short-term catalysts for improvements in IT demand, but HP continues to execute well," Fiorina said in a conference call with analysts.