Updated from 5:02 p.m. EDT

Tech bellwether

Hewlett-Packard

(HPQ) - Get Report

met analysts' revenue and profit estimates in its second-quarter results, but falling PC sales crimped the firm's revenue.

H-P reported revenue of $27.4 billion, down 3% from $28.3 billion in the same period last year, but in line with analysts' expectation. Adjusted for currency, the firm's revenue grew 3% year over year.

The Palo Alto, Calif.-based company, which was one of

TheStreet.com

's

top tech picks

for 2009, earned 70 cents a share, down from 80 cents in the prior year's second quarter.

On a non-GAAP basis, H-P earned 86 cents per share, which included a 2 cent charge related to a patent dispute, but was in line with Wall Street's estimate. The company earned 87 cents a share in the same period last year.

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 23796467001; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

H-P, which competes with

IBM

(IBM) - Get Report

and

Sun Microsystems

(JAVA)

, enjoyed almost 100% year-over-year growth in its services revenue, which came in at $8.5 billion, thanks to last year's acquisition of services giant

EDS

.

"Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule," said H-P CEO Mark Hurd in a statement.

The firm's hardware business, however, has felt the effects of the economic downturn. H-P's Enterprise Storage and Servers (ESS) division reported revenue of $3.5 billion, down 28% year over year. Software sales also slowed, and revenue declined 15% to $880 million.

As predicted by some analysts, H-P's PC sales performed relatively well in an unforgiving spending climate, and the firm's Personal Systems Group saw flat unit shipments. PSG sales nonetheless slipped 19% compared to the prior year's quarter.

The company expects that its third-quarter revenue will be flat to down 2% sequentially, just below analyst expectations of $27.49 billion. Excluding charges, H-P forecasts earnings of 88 cents a share to 90 cents a share, in line with Wall Street's estimate.

During a conference call after the market close, Hurd spoke again about H-P's services business. "The services business more than doubled profits to $1.2 billion, and is now our largest segment," Hurd said.

Also during the call, H-P's CFO, Cathie Lesjak, revealed plans to cut 2% of the company's workforce. The cuts follow restructuring efforts announced by H-P last year and are expected to save $500 million annually beginnning in 2012. "These actions will be implemented over the next 12 months," she said.

H-P had previously forecast annual savings of $2.5 billion following its integration of EDS.

Shares of H-P dipped $1.68, or 4.6%, to $34.90 in extended trading Tuesday.