Hewlett-Packard's (HPQ) fiscal fourth-quarter profit rose 5.2% as the world's biggest computer maker saw increased demand from businesses for higher-margin products such as servers and networking and storage equipment that offset the effects of lackluster consumer demand for personal computers. Shares initially rose in extended trading after the company beat fourth-quarter earnings estimates and first-quarter analyst forecasts, though share prices later leveled off.

Net income for the quarter ended Oct. 31 was $2.54 billion, or $1.10 a share, up from 99 cents, or $2.41 billion, a year earlier, Hewlett-Packard said in a statement Monday. Revenue increased 8.1% to $33.3 billion.

Excluding certain items, Hewlett-Packard's earnings rose 11% to $3.1 billion, or $1.33 a share. The company was expected to earn $1.27 a share on $32.8 billion in sales, the average analyst forecast in a Thomson Reuters survey.

HP profited from increased business investment in products such as storage servers and printers. During a conference call Monday, HP said its enterprise storage and servers division saw sales rise by 25% from a year earlier, while the unit's operating profit jumped 52%. Meanwhile, sales from printing and imaging products were up 8%, with shipments of commercial printers increasing 43%.

Broadening HP's Appeal

"We are winning in the market and we have a significant opportunity in front of us," said HP's new CEO Leo Apotheker. "We are in a unique position to drive better user experiences across our portfolio." Apotheker, formerly head of Germany-based SAP AG (SAP), said he'd been on the job about three weeks and would provide "a more robust perspective" on the company over the next few months.

HP has also been using acquisitions to broaden its business products. HP completed its $2.7 billion acquisition of 3Com in April to better compete with Cisco Systems (CSCO) in the networking-equipment market. In September, HP beat out Dell (DELL) to acquire utility storage company 3Par (PAR) for $2.35 billion to increase its cloud-computing revenue.

Strong revenue stemming from business purchases offset lackluster consumer demand. Sales at HP's personal systems group increased just 4% from a year earlier, as a 13% increase in desktop-computer revenue was partially offset by a 3% drop in notebook-computer sales.

HP is trying to bolster its position in the mobile-device market by jumping into the rapidly-growing computer-tablet industry led by Apple's (AAPL) iPad. HP last month began selling its Slate 500 computer, which will run on Microsoft Corp.'s (MSFT) Windows operating system. The machine will start at a base price of $799. Apple's iPad prices range from $499 to about $800, depending on features.

For the fiscal year, HP boosted profit by 18%, to $3.69 billion, as it widened margins. Revenue rose 10% to $126 billion. The company also forecast fiscal first-quarter profit, excluding some items, of about $1.29 a share on revenue of about $32.9 billion. Analysts forecast earnings of $1.22 on $32.7 billion in sales.

A Complicated Year

In late September Hewlett-Packard hired Apotheker to replace former chief Mark Hurd, in a move that appeared to increase the antagonism between HP and fellow Silicon Valley giant Oracle (ORCL). Hurd was credited with reviving HP after Carly Fiorina's tumultuous tenure as CEO, but he was forced to resign after an outside marketing contractor accused him of sexual harassment. HP said Hurd hadn't violated the company's sexual harassment policies, but concluded that he had filed inaccurate expense reports.

Oracle later hired Hurd to be its co-president. HP sued Hurd, alleging that he risked violating confidentiality agreements because Oracle became a competitor in the server industry when it acquired Sun Microsystems earlier this year for about $7.4 billion.

Oracle Chief Larry Ellison, whose company has been engaged in a legal battle with SAP, later accused Apotheker of stealing ideas from Oracle while running SAP, and unsuccessfully attempted to require Apotheker to appear in trial. Apotheker didn't comment Monday on Ellison's accusations or SAP's case with Oracle.

HP shares were little changed at about 6:15 Eastern time Monday after initially rising about 1% in extended trading shortly after earnings were announced.


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