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HP reported a 26 per cent hike in quarterly profits on Tuesday, underscoring its advantage over Dell.

The printer and PC units in particular cranked net income to $1.55bn, or $0.55 per share, on revenues of $25.1bn, for the three months to January 31. For the same period a year ago revenues were 11 per cent lower at $22.7bn, netting a profit of $1.23bn, or $0.42 per share.

The venerable IT giant sought to show Wall Street how mean it is with the latest in its series of employee-squeezing savings measures.

HP will offer an unspecified number of its older staff an exit with a new program of early retirements. New retirees will be also faced with changes to the company pension scheme though, which are aimed at slashing $500m from the bill to lean up in the tussle with Dell. HP described the pension squeeze as "curtailment gain".

Away from irritations over paying employees, HP's PC unit grew quarterly sales 17 per cent on a year earlier to $8.7bn, with notebook sales spiking more than 40 per cent. In the standard earnings call with analysts, Hurd said: "We had good strength, colored by consumer sales...we felt we were especially strong in notebooks and emerging markets, too." Hurd said he plans to continue to undercut rivals.

Such news will do little to cheer the mood at Dell, which has seen faltering PC sales through its direct model behind a recent run of financial disappointments.

Elsewhere, imaging and printing grew 7 per cent to $7bn and storage and servers grew by 5 per cent overall. The weaker 3 per cent increase in storage was buoyed by 10 per cent rise in server revenues. The software division was up to $550m, or 7 per cent excluding the effect of the Mercury acquisition. The services division, which brings in the tastiest margin, increased revenues by 5 per cent to $3.9bn.

HP's financial report is here . ®

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