Hewlett-Packard Delivers Tech Tonic

Updated from 4:22 p.m. EST Updated from 5:04 p.m. EST

SAN FRANCISCO - Hewlett-Packard(HPQ Quote) calmed tech investors with first-quarter earnings and second-quarter guidance that zoomed past Wall Street's estimates Tuesday.

The Palo Alto, Calif., hardware giant posted first-quarter revenue of $28.5 billion, up 13.5% from revenue of $25.1 billion for the same quarter of last year. Analysts were expecting a top line of $27.6 billion, according to Thomson Financial. On a constant currency basis, the top line grew 8.2%.

Net income grew 40% year over year to $2.1 billion, or 80 cents a share, vs. $1.5 billion, or 55 cents a share, in the year-ago period.

Excluding items, EPS was 86 cents. Analysts were looking for 81 cents.

In recent after-hours trading, H-P shares jumped nearly 5.1% to $46.19.

The company projected second-quarter revenue of $27.7 billion to $27.9 billion and EPS, less items, of 83 cents or 84 cents. Analysts were expecting revenue of $27.43 billion and EPS, less items, of 82 cents.

H-P raised full-year guidance to a range of $113.5 billion to $114 billion. The company had previously projected revenue of $111.5 billion. EPS, excluding items, will be $3.50 to $3.54, up from $3.32 to $3.37

Analysts had projected revenue of $111.7 billion and EPS of $3.36.

Revenue grew 8% in the Americas, the company's second-largest market, to $11.2 billion. The Asia-Pacific region led with 22% growth, to $4.9 billion. And in Europe, the Middle East and Africa, 15% growth brought in $12.3 billion.

Chairman and CEO Mark Hurd said on a conference call that a slowing growth rate of 6% in the U.S., although not as good as in the past, is "pretty good at the company level."

"Some people look at it as good news that it's not a bigger percentage of" revenue, Hurd said.

The fastest-growing product segment was the Personal Systems Group, where revenue rose 24%, to $10.8 billion.

The Technology Solutions Group grew revenue 10% to $9.9 billion, while trimming its expenses by 2.5 percentage points, Hurd said. While the group sells primarily to large businesses, it' not necessarily a good barometer of corporate IT spending because it could be gaining market share, Hurd said.

In the Imaging and Printing Group, which grew 4% year over year to $7.3 billion, total printer hardware revenue was up 1%, commercial hardware grew 13% while consumer hardware declined 2%, according to CFO Catherine Lesjak.

"In the U.S, at the end of the quarter, we saw a little more caution in the consumer segment than we've seen in the past," Hurd said.

An 11% increase in expenses was largely due to the addition of 2,000 to the sales staff during the past year. "We're very underrepresented in the market" across all geographies, including North America, by more than 20% compared to competitors, Hurd said. Much, but not all, of the hiring has been in emerging markets.

The company generated $3.2 billion in operating cash flow, vs. negative cash flow for the same period of 2007. Free cash flow was $2.7 billion.

The company repurchased $3.3 billion worth of shares during the quarter.