Hewlett-Packard Co. (HPQ) on Thursday reported quarterly profit that rose in line with its own prior estimates as the company said it increased revenues twice as fast as rival Dell Inc. (DELL) in desktop and notebook PCs for the second consecutive quarter.

Two key areas that investors have focused on in recent quarters and that drew criticism during the controversial Compaq merger in May 2002 — its personal computer and server businesses — posted continued improvements.

"I would say on balance the merger has worked, and certainly they also did what they said they were going to do in terms of taking costs out, and now it's a question of growing their business, and I think they're doing it," said Rose Papp, research director at Roy Papp and Associates. The firm owns HP shares.

Operating profit in HP's enterprise services business, which sells servers and data storage gear and includes software, was $108 million, an improvement of $190 million over the year-earlier period, HP said.

HP's PC business, under fire from some for its slim profitability in recent quarters, saw revenue of $6.19 billion, up 20 percent from a year earlier, and its operating profit improved to $62 million, compared with $33 million in the year-ago quarter.

"PCs were better than expected," said Alan Loewenstein, co-portfolio manager for the John Hancock Technology Fund, which owns HP stock. "That's a positive because you heard at the end of January that their PC business had softened and here, if they came through with such strong numbers for the quarter, I take that as a positive."

The computer and printer maker, based in Palo Alto, California, said net income rose to $936 million, or 30 cents a share, in the fiscal first quarter ended Jan. 31, from $721 million, or 24 cents a share, a year earlier.

Revenue rose to $19.5 billion from $17.9 billion.

Excluding items, HP said it had a profit of $1.08 billion, or 35 cents per share, compared with a year-earlier profit before items of $877 million, or 29 cents per share.

Analysts had forecast HP, which earlier this month confirmed its prior guidance for the first quarter, to post a profit of 35 cents a share, on average, within a range of 34 cents to 36 cents, on revenue of $19.4 billion.

For the current second quarter, HP said it expects earnings per share before items of about 34 cents on revenue of $19.2 billion to $19.6 billion.

Analysts currently expect HP to post a second-quarter profit of 34 cents per share, on average, within a range of 33 cents to 37 cents. Revenue is pegged at $19.2 billion, on average, within a range of $18.7 billion to $19.9 billion.

HP, which competes with International Business Machines Corp. (IBM), Sun Microsystems Inc. (SUNW) and printer maker Lexmark International Inc. (LXK), also backed consensus analyst estimates for full fiscal 2004 of $1.43 per share, excluding items.

The company's crown jewel, its imaging and printing business, had first-quarter revenue of $5.91 billion, an increase of 6 percent a year ago, but investors may have been looking for even stronger growth.

"It looked like printing was a little light," Loewenstein said. "They did $5.9 billion and I know some analysts were at $6.1 (billion), so you don't know if that's pricing pressure or if they were losing market share to Lexmark."

Shares of HP rose 35 cents, or 1.5 percent, to close at $23.86 on the New York Stock Exchange. The stock has climbed 3.9 percent so far this year, compared with a 7 percent rise in the American Stock Exchange Computer Hardware index. In trading after the close, the stock was off slightly, at $23.78