BOSTON - Hewlett-Packard Co., the world's largest maker of personal computers, blamed lower demand as it reduced its sales estimates yesterday for the second half of its fiscal year, which ends Oct. 31.

The forecast was the company's first since buying Compaq Computer Corp.

Acquisition costs related to Compaq will be $2.6 billion, 86 percent more than forecast, because of higher severance expenses and $500 million to write off good will, said Jeffrey J. Clarke, Compaq's former chief financial officer and co-leader of the integration team.

But HP also predicted the deal would save more in the next two fiscal years than it had previously forecast.

Second-half sales will be stagnant at $35 billion to $36 billion because of falling demand for PCs, Chief Financial Officer Robert P. Wayman said at a meeting with analysts in Boston.

Sales had been expected to rise as much as 3 percent, to $37.1 billion, Chief Executive Officer Carleton S. "Carly" Fiorina said. Investors said they don't expect demand to rebound soon.

HP shares rose 12 cents yesterday to close at $18.97. They have risen 8.8 percent since the Compaq acquisition was completed May 3.

Sales in the third quarter, which ends July 31, are forecast to drop as much as 7 percent, to $16.2 billion, because of the decline in PC sales, Wayman said.

Analysts expected sales of $17.7 billion, the average estimate in a Thomson Financial/First Call survey. The company had forecast a rise of 2 percent to 3 percent, Fiorina said.

Fiscal 2003 sales will grow 4 percent to 6 percent, or as much as $78.9 billion, the company said in its first forecast for the fiscal year that begins Nov. 1.

Sales will rise 7 percent to 9 percent in fiscal 2004, or as much as $86 billion, HP said. That's slightly below earlier estimates, when the company predicted sales would increase 8 percent to 10 percent in fiscal 2004.

"Now is not the time to set the bar too high," Fiorina told analysts. "Now is the time to set the bar that we can meet or beat."

The company was expected to have sales of $70.8 billion in fiscal 2003 and $80.2 billion in fiscal 2004, the average estimates from analysts surveyed by IBES International Inc. HP was forecast to have sales of $74.8 billion this year, according to the Thomson Financial/First Call analyst survey.

Profit, excluding some costs, in the printer and services divisions will grow 11 percent to 13 percent in the second half, and the PC division will fall 2 percent to 3 percent, said HP President Michael D. Capellas.

Fiorina said she wouldn't accept a pay raise until the next fiscal year, pointing to the job cuts and slow economic growth.

The company raised its predicted savings from buying Compaq to $2.5 billion in fiscal 2003 and to $3 billion in 2004, Fiorina said.

HP has said it's firing 15,000 workers to reduce costs. The company had estimated acquisition-related charges of as much as $1.4 billion.

The computer maker had predicted savings of $2 billion in fiscal 2003 and $2.4 billion a year later. The company plans to eliminate 10,000 workers by Nov. 1, the end of this fiscal year, and to fire 5,000 in fiscal 2003, Fiorina said.