H-P Rediscovers PC Mojo

Updated from 9:21 a.m. EST

Hewlett-Packard(HPQ Quote) got sustenance from an unlikely source last quarter, riding solid gains in its maligned personal computer division to a solid earnings beat.

Startled investors bid up the shares more than 3% to $29.95 early Friday. Dell(DELL Quote), whose recent lackluster PC performance made H-P's all the more improbable, also benefited, rising about a nickel to $29.92 in early trading.

In the fourth quarter ended Oct. 31, H-P reported sales of $22.9 billion, up 7% year over year and above analysts' expectations of $22.78 billion. Earnings fell to $416 million, or 14 cents a share, from $1.09 billion, or 37 cents a share, a year ago, due to a 37-cent-a-share charge related to workforce restructuring and amortization.

However, excluding the various items, H-P's earnings for the quarter were 51 cents, well above Wall Street's estimate of 46 cents a share.

H-P had guided revenue for its fourth quarter between $22.4 billion and $22.8 billion, and pegged earnings between 44 and 47 cents a share.

"H-P delivered another strong quarterly performance, with balanced revenue growth, good cost discipline, improved margins in key businesses and strong cash flow," Mark Hurd, CEO and president, said in a statement. "We are pleased with our progress to date, but there is more work ahead of us."

The company said revenue in its Personal Systems unit grew 9% to $7.1 billion, with unit shipments up 13%. On a year-over-year basis, desktop revenue increased 1% and notebook revenue grew 23%. Revenue for commercial clients, which includes workstations, grew 8% over the prior-year period, while revenue in consumer clients grew 14%.

The results compared favorably with last week's earnings report by Dell, which posted a year-over-year 2% decline in desktop revenue and "mobility" (notebook) revenue growth of 14%.