this week, noting that it described current employment plans as "unaffordable given the pressures on our business." A noted that Lesjak had been a co-signer.
The memo said that in the tough July quarter, "we will be driving hard for revenue and profit." The two executive added: "We have absolutely no room for profitless revenue or any discretionary expenditures."
In February, the company released a forecast for second-quarter sales and profit that missed analysts' estimates, and H-P said the shortfall reflected slower demand for services and consumer products.
But the memo went several steps further, suggesting the pressure that exits for job reductions.
"This is a continuation of what we've seen recently from HP -- weakness on the top line, but better cost controls," Brian Marshall, an analyst at Gleacher & Co. in San Francisco, told Bloomberg.
Palo-Alto-based Hewlett-Packard's shares fell 4.8% in Frankfurt trading, to the equivalent of $37.94 at 9:25 a.m., the news service said, noting that its stock had lost as much as 5.1% in extended Monday trading. Shares fell 61 cents to $39.80 in regular NYSE trading earlier.
News of the memo report to this morning. [Read the press release .] It had been scheduled for May 18 in the afternoon. Bloomberg's analyst survey predicted that H-P would report a profit of $1.21 a share -- excluding certain costs -- on sales of $31.5 billion in the period, which ended in April.
[Read on the announcements today.]
The morning earnings report, in slashing H-P's full-year sales forecast by $1 billion, noted that second-quarter services-business earnings fell to $1.36 billion from $1.4 billion, while its sales increased 1.5%, to $8.98 billion. The services business was an area that CFO Lesjak specifically addressed.
"They need to fix the services business," Abhey Lamba, an analyst at International Strategy & Investment Group in New York, told Bloomberg after the earnings report. "The issue in services, where Apple is not really hurting them, that's kind of isolated to HP."
The company plans to hire a new executive to manage its enterprise-services unit, reporting to the CEO, and Apotheker said H-P also is speeding efforts to offer customers more profitable technology services. The company is signing IT outsourcing deals that are hurting margins because of their labor-intensity. Increasing H-P services that help customers create software applications or outsource customer service, the CEO said. "We have overinvested operationally and underinvested strategically. It is my top focus going forward."The disappointing new forecast in the memo, along with the earnings report, according to Bloomberg, dampened reviews of Apotheker's first quarter as CEO. The challenges he faces include a reliance on home-computer sales, which leaves the company vulnerable to consumer slumps. Also, it needs acquisitions in services to reflect the benefits of cloud computing.
H-P still is dealing with headcount that surged in late 2008 when it paid $13.9 billion to acquire Electronic Data Systems. The 87% rise in Its employment ranks, according to Bloomberg, swelled the company to 321,000 that October 2008, from 172,000 the previous year.
There have been several post-Apotheker changes among H-P's top executives. A Bloomberg tally noted that it had hired Martin Homlish -- a former Apotheker colleague at SAP AG -- as chief marketing officer April 19. H-P also named Jan Zadak to head its business computing sales, replacing Tom Hogan, who is leaving the company.
Apotheker is stepping up the company's emphasis on higher- margin businesses, including servers, storage computers and software, and lessening its dependence on PCs, said Marshall, who has a "buy" recommendation on Hewlett-Packard.
The H-P e-mail cited how CFO Lesjak and human-resources vice president Tracy Keogh are "driving a full headcount re-planning process" that is designed to show "the new realities of the market and our position." Bloomberg cited a company filing showing that H-P had 324,600 employees as of Oct. 31.
Apotheker became CEO on Nov. 1, outlining an approach earlier this year that involved expanding software and building up the market for Internet-delivered computing.
Hewlett-Packard plans to put its WebOS mobile software onto a broader range of products, ramping up output to more than 100 million devices a year, he said.
Also, a cloud-computing service is designed to allow developers to create their own applications for consumers and businesses running on HP servers.
Further, H-P announced a 50% hike in its dividend.