NEW YORK (CNN/Money) - As IBM drives toward a long-term goal of double-digit earnings growth, the company will take aggressive steps to address problem areas such as PCs and hard-disk drives while seeking to gain share in key markets such as servers and IT services, Big Blue's newly minted CEO said Wednesday.

Samuel Palmisano, who took the reins of the world's largest computer company after Louis Gerstner retired in March, also hinted that there will be some job cuts, although he offered no real insight into where they would be made or what the magnitude might be.

"We have had operation issues and challenges that need to be addressed," Palmisano said during a meeting with will Wall Street analysts Wednesday afternoon.

"And make no mistake ladies and gentlemen, we are addressing them," he added.

It was Palmisano's first meeting with analysts as Big Blue's CEO. And while he focused on the longer-term prospects for IBM and the broader IT industry and touted the virtues of his company's business model, Palmisano also acknowledged the difficult conditions the industry has been struggling through recently.

The recession in the U.S. economy resulted in sharp declines in corporate IT spending last year, and the overall IT industry contracted for the first time in recent memory.

And as have most of its competitors, IBM has been scrambling to bring its costs in line with the reduced revenue.

During the first quarter of this year, IBM logged an 11.4 percent decline in revenue, compared with the same quarter a year earlier, and a dwindling gross margin.

At the same time, IBM executives said they expect to be able to achieve a profit of $4.16 per share and $83 billion in revenue for all of 2002.

Palmisano offered no additional comments about the company's current quarter or the rest of the year during Wednesday's meeting, focusing his remarks instead on the company's longer-term strategy.

And that revolves around profit growth driven by gains in productivity and operating efficiency, he said.

"When you ... assume that we can continue to drive share growth and productivity across the enterprise, those factors combined support our goal of double-digit EPS growth over the long term," Palmisano said.

He said IBM is taking advantage of the current IT spending slowdown to sharpen its focus on customers and gain market share in key areas such as servers, software and services while at the same time driving productivity, cost and expense improvement.

Palmisano touted IBM's "solutions"-based business modeling, which involves providing hardware, software and services to businesses, which drives cost savings. He said outsourcing is on the rise and likely will continue to rise as large companies seek to further cut costs.

Meanwhile, he acknowledged that there remained some trouble spots within IBM, including its PC and hard-disk-drive businesses, which he said the company is taking steps to address.

In the hard-drive business, IBM is in the process of negotiating to form a joint venture with Hitachi. Palmisano said such a move is necessary because the hard-disk-drive industry, which has been particularly hard-hit by the tech spending slowdown, is consolidating.

"This was an issue. We're addressing it, and we hope to come to closure," he said. "When we come to closure ... we'll share with you what that means from a financial perspective. But we're not done. We're still negotiating.

As for PCs, IBM already has exited the consumer PC business, choosing to focus instead on sales to corporate customers.

And while he did not offer any specific plans to shore up IBM's existing PC business, Palmisano said it remains strategically important because PCs often are a key part of a comprehensive IT solution. The PC business is not an area where IBM will be seeking to gain market share, he added.

Palmisano also downplayed the importance of revenue growth, an area of concern for many company watchers who have become accustomed to robust growth in revenue every year.

"Whether we're an $80 billion company or a $100 billion company or a $70 billion company really isn't the point," Palmisano said. "At the end of the day, what our shareholders want is a demonstrated ability that we can drive double-digit EPS sustainable in a business model over the longer term."

To meet its longer-term financial goals, Palmisano said IBM will need to drive $1 billion to $2 billion in costs out of the company every year.

There has been a lot of speculation recently that IBM will soon begin cutting thousands of jobs as part of its bid to cut costs.

When asked directly by Sanford C. Bernstein & Co. analyst Toni Sacconaghi why investors should not expect as many as 20,000 job reductions given IBM's recent declines in revenue, Palmisano called it an "excellent question," and hinted that there indeed will be some job cuts.

"Your analysis is absolutely appropriate, from a macro level," Palmisano said.

"Clearly there are other areas of our business that we need to be much more efficient in, and we are going to address those issues," he said. "You'll hear more about what we're doing to address those issues. That's pretty straightforward."

However, the actual number of direct layoffs is likely to be lower. If IBM were to freeze hiring, the company would lose 15,000 workers through normal attrition, Palmisano said.