Hewlett-Packard Co. (HPQ) shares rose more than 4 percent Wednesday after the computer maker's quarterly performance topped Wall Street forecasts, though its new leader lowered profit expectations and warned "there's no quick fix" to boosting profits.

Shares of HP rose $1 to close at $22.55 in Wednesday trading on the New York Stock Exchange.

CEO and President Mark Hurd (search), who joined HP in late March after the board ousted Carly Fiorina (search), refused to provide details during conference calls Tuesday about how he'll shift business strategies in upcoming quarters. But he acknowledged that HP must boost software sales and become more competitive with rivals — likely by laying off thousands of employees.

"What's clear to me is that hard work lies ahead of us," Hurd said. "The reality is that there's no quick fix."

For the three months ended April 30, Palo Alto-based HP reported a profit Tuesday of $966 million, or 33 cents per share, up 9 percent from $884 million, or 29 cents per share, in the second fiscal quarter of 2004.

Excluding special items, such as $177 million in buyouts and other work force reduction expenses, HP would have earned $1.07 billion, or 37 cents per share, up 4 percent from $1.03 billion, or 34 cents per share, in the same period a year earlier.

Quarterly revenue was $21.6 billion, up 7 percent from $20.1 billion in the same quarter a year ago. If adjusted for the declining value of the dollar, HP sales would have grown only 4 percent.

HP's quarterly results were 1 cent ahead of expectations of analysts polled by Thomson Financial, who forecast 36 cents per share on sales of nearly $21.4 billion.

Most analysts polled this week by Thomson continued to rate HP stock a "hold," and share performance lags that of HP's fiercest rivals: Dell Inc. (DELL), one of the world's most efficient retailers, and IBM Corp. (IBM), the leader in technology consulting services — a lucrative niche HP wants to penetrate. The company is in a similar position to retailer Kmart Holding Corp., whose profits are squeezed between high-end discounter Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT) , a model of retail efficiency.

HP has been downsizing for more than three years, and about 1,900 employees took advantage of a voluntary severance program in the second quarter. Executives spearheaded a companywide wage review May 1, the first time in two years that works have received raises.

Hurd, who on Tuesday characterized HP's cost structure as "off-benchmark," appears to be escalating a cost-cutting campaign that earned Fiorina the moniker "Chainsaw Carly" throughout Silicon Valley. HP, which employs about 150,000 people worldwide, expects to spend $100 million to reduce its work force in the current quarter.

Work force reduction expenses, among others, prompted executives to lower fiscal third-quarter revenue to the range of $20.3 billion to $20.7 billion, with earnings per share of 29 cents to 31 cents. Analysts were expecting HP sales of about $20.4 billion and per-share earnings of 32 cents.

Hurd emphasized that HP, one of the technology industry's most aggressive proponents of exporting jobs to low-wage countries, would continue to send jobs offshore. Only about 35 percent of HP's revenue comes from the United States, Hurd said Tuesday.

"We're constantly optimizing our headcount around the globe," Hurd said. "We send work to wherever the revenue is."

The earnings report caps several tumultuous quarters for HP, which in February fired Fiorina for failing to slash costs and boost sales quickly enough.

Throughout 2004, Fiorina became the target of intensifying criticism for her ambitious diversification strategy. Through the 2002 acquisition of Compaq Computer Corp., she attempted to change HP from a bloated company focused on printers and ink into a Silicon Valley consulting and computing powerhouse.

Despite her efforts, ink and printers still drive revenue. The "imaging" division reported fiscal second-quarter sales of $6.4 billion, up 5 percent from the same period of 2004.

Analysts have been speculating in recent weeks whether Hurd would take a so-called "goodwill writedown" on the Compaq merger, a move that would essentially downgrade the value of the $19 billion acquisition. Fiorina portrayed it as a deal that would streamline efficiencies and dramatically boost profits, but many business experts say it instead created management hassles and eroded employee morale — without any financial payoff to shareholders.

On Tuesday, Hurd said he was still considering whether to write down goodwill related to the merger.

"There's an impression that taking a writedown in goodwill is a judgment you can make anytime you like, but that's not exactly how it works," Hurd said during a conference call with journalists. "That decision is one we'll continue to evaluate."