PC Sales Boost HP's First Quarter Earnings

The company also reported revenue of $19.5 billion for its quarter ended Jan. 31, a 9 percent jump over the $17.9 billion recorded in the year-earlier period.

The Personal Systems Group was a bright spot for HP, with the unit's revenue totaling $6.2 billion for the period, a 20 percent increase from first-quarter 2003 when it logged sales of $6 billion. The group also had an operating profit of $62 million for the quarter, compared with $22 million a year earlier. HP said the unit's profit was the highest since the Compaq merger.

"In Personal Systems, we grew revenue in both desktops and notebooks almost twice as fast as our nearest competitor for the second quarter in a row, achieved the No. 1 market-share position worldwide and generated record profits," said HP Chairman and CEO Carly Fiorina in a statement prior to a conference call with analysts.

Despite weakness in Unix servers, HP's Enterprise Systems Group, which includes both hardware and software, had revenue of $3.9 billion, a 5 percent growth year over year, and operating profits of $108 million. The Enterprise Systems Group had a loss of $82 million in first-quarter 2003.

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HP said Unix revenue declined 13 percent from a year earlier, reflecting intense pricing pressure. Alpha revenue declined 32 percent from a year earlier, and HP 9000 server revenue was flat.

HP Services revenue was up 6 percent to $3.2 billion but profits were down to $258 million compared with $339 million for the year-earlier period. Fiorina said services experienced intense pricing pressure in customer support and weakness in consulting and integration. She said that managed services, however, experienced a 27 percent growth from a year earlier.

Imaging and Printing recorded sales of $5.9 billion and profits of $968 million compared with sales of $5.6 billion and earnings of $911 million a year earlier.

HP said it expects revenue of $19.2 billion to $19.6 billion for its fiscal 2004 second quarter and expects earnings per share of approximately 34 cents.