H-P Hits One Out

Updated from 5:34 p.m. EST

Strong sales of notebook PCs and printers pushed Hewlett-Packard's(HPQ Quote) fiscal first-quarter profit up 26% and lifted its top line above Wall Street expectations.

The better-than-expected financial results, which H-P reported after Tuesday's market close, also were achieved by continuing cost-cutting. And H-P signaled that cost controls remained front and center, announcing that it would terminate its pension plan for U.S. workers.

The Palo Alto, Calif., company grew first-quarter sales 11% to $25.1 billion, ahead of its own guided range of $24.1 billion and $24.3 billion, as well as Wall Street's expectation of $24.3 billion.

"This was a solid start to the year: revenue grew, margins expanded and we continued to take market share," said CEO Mark Hurd in a conference call with the press following the release of the results.

H-P earned $1.5 billion, or 55 cents a share, vs. $1.2 billion, or 42 cents a share, a year earlier.

Excluding $279 million, or 10 cents a share, in amortization charges for purchased intangibles and in-process research and development costs, H-P said it earned 65 cents a share.

On that basis, analysts were expecting 62 cents EPS.

Shares of H-P were recently off 47 cents to $42.66 in after-hours trading.

H-P said it sold $8.7 billion worth of PCs in its first quarter, with unit shipments up 19% year over year. While desktop PC revenue declined 1%, sales of notebook PCs surged 40%. And H-P grew its operating margin to 4.7%, which Hurd described as the highest level in years.