HP came in with revenues down 3% to $27.4 billion in its second quarter or, if you look at it another way, up 3% in local currency because of the gyrations in the dollar.

All segments but services were hit a lot worse than the final numbers look.

Net earnings were down 17% to $1.7 billion or 70 cents a share, down from 80 cents year-over-year. That would be 86 cents non-GAAP, which is where most analysts expected HP to be at the end of April.

The company said its performance was largely due to services, currently its largest segment, making it increasingly like IBM, its model, and a complement to the company's current administration for buying EDS last summer.

Services more than doubled its operating profit to $1.2 billion. The deal pipeline has reportedly increased and the EDS integration is tracking ahead of schedule.

However, CEO Mark Hurd said HP would fire another 2% of its workforce in the next 12 months, some 6,400 people, and take a 12-14-cent charge this quarter to cover it. The company has trimmed half of the 25,000 souls it had previously targeted for termination after the EDS acquisition.

Hurd's also found another $500 million in real estate that he can cut from EDS by 2012 expecting to emerge from this recession with the industry's best overall cost structure.

HP expects its third-quarter revenue to be flat to down 2% sequentially with earnings of 64 cents to 68 cents - figure $26.8 billion-$27.4 billion - and reckons its showing in the year, ending in October, will decline 4% to 5%, resulting in earnings of $3.02 to $3.16, worse than the 2%-3% drop it previously forecast.

Think $113.46 billion to $113.6 billion.

This was not what the stock market wanted to hear. HP's stock lost close to 5% in after-hours trading.

On the conference call Hurd said he was "not ready to call it better. It's steady as she goes." Other than volatile currency, the market is the same. The only bright spots were China and U.S. consumers. Otherwise each month is behaving as HP expected, he said.

Demand is not improving.

His outlook - and HP ships more PCs than anybody - differs from Intel CEO Paul Otellini who has called a bottom.

But it appears that HP could have shipped some more unidentified hardware than it did but didn't have it to ship.

HP's Q2 GAAP operating profit was down 12% to $2.3 billion. Its non-GAAP operating profit, which excludes amortization of purchased intangible assets, restructuring charges and acquisition-related charges, was up 1% to $2.8 billion.

It scored record cash flow of $5 billion.

The number of PC units HP shipped was flat with revenues down 19% to $8.2 billion. Notebook revenue was down 13%, while desktop revenue plunged 24%. Commercial revenues were down 22%, while consumer revenue dropped 16%. The unit's operating profit was $374 million, or 4.6% of revenue, down from $544 million, or 5.4% of revenue year-over-year.

Printer revenue fell 23% to $5.9 billion. Supplies revenue was down 14%, while commercial hardware revenue and consumer hardware revenue nose-dived 40% and 31%, respectively. Printer units crashed 27%, with commercial units down 36% and consumer units down 23%. The unit's operating profit was $1.1 billion, or 18.2% of revenue, versus $1.2 billion, or 16% of revenue.

Enterprise Storage and Servers (ESS) revenues were down 28% to $3.5 billion. Storage revenue declined 22% with the mid-range EVA product line down 21%. Industry standard server revenue and Business Critical Systems revenue each declined 29%, while ESS blade revenue was down 12%. The unit's operating profit was $250 million, or 7.2% of revenue, down from $655 million, or 13.7% of revenue.

Software, never HP's strong suit, was down 15% to $880 million. Business technology optimization and other software revenue dropped 15% each. The unit's operating profit was $157 million, or 17.8% of revenue, up from $104 million, or 10% of revenue last year.

HP financial services revenues were down 6% to $641 million. Financing volume increased 7%, and net portfolio assets declined 1%. The unit's operating margin was 7.2% of revenue, up from 6.9%.

HP said revenue grew 9% in the Americas to $12.1 billion, declined 11% in EMEA to $10.6 billion and dropped 10% in Asia Pacific to $4.7 billion.

When adjusted for the effects of currency, revenue grew 12% in the Americas while declining 2% in EMEA and 5% in Asia Pacific.

Revenue from outside of the United States in the second quarter accounted for 64% of total revenue, with revenue from the BRIC countries declining 12% year-over-year period contributing 9% of total HP revenue.

Services revenue increased 99% to $8.5 billion due primarily to the EDS acquisition. Infrastructure Technology Outsourcing posted revenue of $3.8 billion while Technology Services, Application Services and Business Process Outsourcing posted revenue of $2.4 billion, $1.5 billion and $709 million, respectively. Operating profit was $1.2 billion, or 13.8% of revenue, up from $507 million, or 11.9% of revenue, in the prior-year period. The EDS integration is tracking ahead of plan.

HP said inventory stood at $5.7 billion, down seven days. Accounts receivable of $14.7 billion was up five days. Accounts payable ended the quarter at $11.4 billion, down six days.

The company's got $12.9 billion in cash and long-term debt of $13 billion.