Hewlett-Packard ( HWP) raised its guidance for the first quarter, citing a spike in demand for its products and saying that consumer technology spending appears to be picking up. H-P said Monday that it now expects revenue for the first quarter to come in moderately higher than the fourth quarter. Previously, the company expected the top line to decline slightly because the first quarter tends to be seasonally slower. Fourth-quarter revenue totaled $10.9 billion, and analysts are expecting about $10.7 billion for the first quarter, according to Thomson Financial/First Call. The company also plans to report earnings above the consensus estimate of 16 cents a share because of its efforts to raise gross margins and keep expenses flat with the fourth quarter. "Economic conditions around the world continue to be challenging, but consumer technology spending is clearly showing some strength," Carly Fiorina, the chief executive of H-P, said in a statement. "As a result, we're seeing better than expected revenues in our PC and imaging and printing businesses." Fiorina said the company would continue to improve its cost structure. "We remain convinced we are up to the task of successfully integrating Compaq ( CPQ) and creating a powerful new H-P." The company's planned merger with Compaq has been a tough sell since its announcement last September, but lately some analysts have been suggesting that the deal has a better chance of going through now than it did a few weeks ago. Members of the founding families of Hewlett-Packard are still opposed to the merger, but last week the European Commission
endorsed the proposal. H-P's new forecast is the latest indication that the worst might be over for computer hardware makers. Already this year, Compaq and Dell ( DELL) have guided Wall Street higher. H-P is scheduled to report first-quarter earnings after the closing bell on Feb. 13. The company's shares were recently up 45 cents, or 2.1%, to $22.45. Compaq was up 13 cents, to $12.23.