May 20 (Bloomberg) -- Hewlett-Packard Co., the world’s largest maker of personal computers and printers, fell 5.2 percent in New York trading after saying that sales haven’t shown signs of rebounding.

Annual revenue will drop 4 percent to 5 percent, the lower end of a forecast range given in February, Hewlett-Packard said yesterday. Chief Executive Officer Mark Hurd said he’s basing the outlook on the expectation that the economy won’t improve in coming months.

“I’m not ready to call it better,” Hurd, 52, said on a conference call. “It’s roughly going to be the same the rest of the year.”

Hurd, who’s already trimmed jobs and slashed salaries at the company, will eliminate an additional 6,400 workers in the next 12 months as sales slump for PCs and printers. Hewlett- Packard’s services unit -- bolstered by the $13.2 billion acquisition of Electronic Data Systems Corp. last year -- is becoming “our largest profit driver today,” he said.

Hewlett-Packard, based in Palo Alto, California, fell $1.91 to $34.67 at 4 p.m. in New York Stock Exchange trading. They have declined 4.5 percent this year.

Second-quarter net income declined to $1.72 billion, or 70 cents a share, from $2.06 billion, or 80 cents, a year earlier, the company said.

Cost Cutting

Excluding some costs, profit was 86 cents a share in the period, which ended in April. Sales dropped 3.2 percent to $27.4 billion. Those results were in line with analysts’ estimates compiled by Bloomberg survey.

Hurd, who marked his fourth anniversary as CEO last month, has used his tenure to pare operating costs and boost profit. In September, after buying EDS, he announced plans to eliminate 24,700 jobs. In February, he cut 2009 salaries as much as 15 percent. The job cuts announced yesterday equal to about 2 percent of the company’s workforce of 320,000.

Revenue this quarter will drop as much as 2 percent from the previous period, the company said. That signals sales of as low as $26.8 billion, compared with the $27.5 billion average estimate of analysts. Excluding some costs, profit will be 88 cents to 90 cents, in line with predictions.

Computer Sales

While slow technology spending will continue to hurt sales, Hewlett-Packard is doing a good job controlling costs, said David Bailey, an analyst at Goldman Sachs Group Inc. He reiterated his recommendation that investors buy the shares, citing the fact that second-quarter results were slightly ahead of Wall Street expectations “in a weak environment.”

UBS AG also maintained its buy rating, citing the diversity of Hewlett-Packard’s products, the breadth of its distribution channels and Hurd’s ability to contain costs.

“H-P remains better positioned coming out of the downturn,” said Maynard Um, a UBS analyst in New York.

Of 33 Hewlett-Packard analysts tracked by Bloomberg, 28 say investors should buy the shares and five have a hold rating. None says to sell.

Sales in the PC division fell 19 percent from a year earlier to $8.19 billion as prices declined, while operating profit at the business fell 31 percent. Unit shipments were unchanged from a year earlier. The profit margin, or earnings as a percentage of sales, narrowed to 4.6 percent from 5.4 percent. PCs account for about 30 percent of the company’s sales.

Industry Shipments

Industrywide PC sales fell 7.1 percent last quarter as companies and consumers curbed spending, according to research firm IDC in Framingham, Massachusetts. To maintain demand, Hewlett-Packard has cut prices, added thinner notebooks and started selling scaled-down portables known as netbooks.

Hurd also has made acquisitions to expand into more profitable businesses, including software and services. He made his biggest bet last year with the takeover of EDS, the No. 2 provider of computer services behind International Business Machines Corp. EDS helped Hewlett-Packard double its second- quarter services revenue to $8.5 billion.

Sales of printers and supplies, such as ink, fell 23 percent to $5.92 billion. Printer shipments plunged 27 percent. Earnings at the business were $1.07 billion, yielding a margin of 18.2 percent.

Second-quarter revenue at Hewlett-Packard’s server and storage business declined 28 percent to $3.46 billion.

“I just think we’re going to need another quarter of data to be able to really make a meaningful statement about any upturn,” Hurd said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: May 20, 2009 16:07 EDT