Compaq

(CPQ)

lowered its earnings expectations for the first quarter, citing the continued weakness in the U.S. economy and the resulting pricing pressure, and the PC maker set plans to cut 5,000 jobs, or about 7% of its workforce.

The company now expects first-quarter earnings of 12 cents to 14 cents a share. Compaq projected revenue of $9 billion to $9.2 billion, roughly 4% below the year-ago period. Compaq is also taking a number of actions to improve its business model and will record a restructuring charge of $125 million to $150 million in the first quarter.

According to

First Call/Thomson Financial

, analysts expect the company to earn 18 cents a share in the first quarter, up from 16 cents in the year-ago period. One analyst provided a top line forecast of $9.6 billion for the quarter, up from $9.5 billion last year.