SAN FRANCISCO, US - HEWLETT-PACKARD reported higher-than-expected quarterly earnings and forecast results ahead of Wall Street targets as it sold more PCs and server computers, sending its shares up 6 per cent.

Analysts noted some weakness in the printer division but said the report on Tuesday showed HP was able to manage through a tough economy.

Net income in HP's fiscal first quarter ended Jan 31 increased to US$2.13 billion (S$3 billion), or 80 cents per share, from US$1.55 billion, or 55 cents per share, a year earlier. Revenue advanced to US$28.5 billion from US$25.1 billion.

Analysts, on average, expected earnings before some costs of 81 cents per share and revenue of US$27.6 billion, according to Reuters Estimates.

'This positions the company well for 2008 and shows that they're able to execute even in a slowing economy,' said analyst Shannon Cross of Cross Research.

'They needed to do this (have a strong earnings report). They still had a slowdown from the printer side but the other parts of the business made up for it.'

HP was helped by cost cuts and strong sales outside the United States as US technology spending slowed on recession concerns.

But HP faces a tougher environment this year as consumers and companies reduce spending on technology hardware, the bulk of HP's business, and competition with a resurgent Dell, the number-two PC maker, heats up.

'Our cost savings are significant and ongoing,' Chief Executive Mark Hurd told reporters on a conference call.

HP forecast fiscal second-quarter earnings per share before items of 83 to 84 cents, above the average Wall Street forecast of 82 cents. HP projected second-quarter revenue ranging from US$27.7 billion to US$27.9 billion, compared with the average analyst forecast of US$27.5 billion.

HP shares rose 6.2 per cent in extended trading after closing up 8 cents at US$43.95 on the New York Stock Exchange. -- REUTERS