Strong demand boosts HP profits

Hewlett-Packard has reaped the benefits of a cost-cutting drive to record an increase in profits for the three months to 31 January to $1.55 billion, up from $1.23 billion in January 2006 on higher sales of $25.1 billion during the quarter.

The US firms PC sales rose 17 per cent to $8.72 billion while sales of notebook rose more than 40 per cent.

It improved its sales following a cost-cutting drive, which resulted in savings from elimination of jobs and closures of offices that enabled the computer maker to pass on the benefits of lower costs to its customers. Following its cost cutting strategy, HP has eaten in to Dell's sales for the second quarter in a row.

IT market research group IDC reported that HP's PC shipments jumped 24 per cent during the last quarter while Dell's dropped 8.4 per cent. Mark Hurd, chief executive, HP, said the company's market share had increased in many key businesses and margins improved as well.

HP also revealed it would be changing its defined benefit pension scheme, which would lead to savings of $500 million.

HP's printing division, its most lucrative unit, recorded earnings of $1.07 billion, up from $973 million a year earlier as sales rose almost 7 per cent to $7 billion.