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In an unexpected reversal, Hewlett-Packard's core PC business has boosted the company to a 25 per cent increase of profits while its enormous service division went kinda limp.

During its first fiscal quarter, which ended January 31, HP pulled in profits of $2.3bn, up from $1.9bn during the same period last year.

The is was driven largely by a healthy increase in PC and server sales and a resurgence of the company's printer business - a sign that worldwide tech spending is creaking back to life. Meanwhile, HP's services unit - which has been the company's saving grace for several quarters now - suffered a slight decline.

Net revenue for the quarter was $31.2bn, up 8 per cent from $28.8bn.

HP's enterprise storage and server biz pulled in revenues of $4.4bn, up 11 per cent year-over-year. Server revenue increased 27 per cent in the quarter, while storage revenue dropped 3 per cent – weighted down particularly by a 5 per cent drop in sales of its Enterprise Virtual Array (EVA) midrange product line. Business Critical Systems revenue fell 22 per cent as ESS blade revenue jumped 24 per cent compared to the same period last year.

PC sales increased 20 per cent to 10.6bn in the quarter. Notebook revenue was up 25 per cent. And desktop revenue increased 16 per cent. HP said total unit shipments for its Personal Systems Group was up 26 per cent, maintaining its lead in worldwide PC market share.

The company's printing business – which hasn't used black ink for its own books in some time – saw revenue increase 4 per cent to $6.2bn. Printer unit shipments increased 16 per cent, with commercial printer units up 11 per cent and consumer printer units up 18 per cent.

HP Software was flat at revenue of $878m. HP Financial Services revenue increased 13 per cent to $719m. Revenue from HP's Services unit, however, decreased 1 per cent to $8.7bn. That's not a big tumble – and $8.7bn ain't nothing to sneeze at – but its a notable drop because the biz had been keeping the HP earnings above water during (what was hopefully) the worst of the global financial downturn.

Looking at Q2 for fiscal 2010, HP expects sales between $29.4bn to $29.7bn. The company generated revenue of $28.8bn in first quarter 2009.

For full-year fiscal 2010, HP now expects total revenue to be approximately $121.5bn to $122bn, up from its previous estimate of $118bn to $119bn.

HP's biggest rival, Dell, will report its quarterly earnings this Thursday. ®

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