Feb. 17 (Bloomberg) -- Shares of Hewlett-Packard Co., the world's second-biggest personal-computer maker, rose as much as 3.1 percent in Europe after the company reported profit and sales that beat analysts' estimates a week following the ouster of Chief Executive Carly Fiorina.

Hewlett-Packard traded at the equivalent of $21.71 at 9:25 a.m. in Germany, up from yesterday's closing price of $21.06 in New York. The Palo Alto, California-based company yesterday said first-quarter sales rose 9.9 percent to $21.5 billion. Profit before some costs was 37 cents a share, beating the 34 cent average estimate of 14 analysts surveyed by Thomson Financial.

The results allayed investors' concerns that Hewlett-Packard dismissed Fiorina because of financial or operational stumbles. Hewlett-Packard delivered on Fiorina's pledge in December to generate ``predictable'' results after missing analysts' estimates in three of the past nine quarters. Fiorina's efforts to stem price cuts on PCs enabled the unit to double profit last quarter.

``It shows they did not get the revenue growth by selling PCs lower than they should,'' said Chuck Jones of Stein Roe Investment Counsel in San Francisco, which manages $15 billion, including Hewlett-Packard shares.

Fiorina staked her career on the $18.9 billion purchase of Compaq Computer Corp. in 2002 and was removed in part because of her failure to produce the profit and sales growth she promised. The PC unit's profit more than doubled to $147 million and sales rose 11 percent.

Hewlett-Packard's net income rose to $943 million, or 32 cents a share, from $936 million, or 30 cents, a year earlier, Hewlett-Packard, also the world's largest printer maker, said yesterday after U.S. markets closed.

Before today the company's stock had gained 0.4 percent this year, and declined 10 percent in the past 12 months.

`Maintaining Focus'

``We're concentrated on maintaining focus and operational discipline,'' Bob Wayman, the company's chief financial officer and an interim replacement for Fiorina, said on a conference call with analysts. ``We understand the importance of consistency of operations and profitable growth.''

Hewlett-Packard missed analysts' estimates three times in the past nine quarters. Fiorina blamed ``missteps'' in the unit that sells servers, computers that run corporate networks, for a shortfall in 2004 third-quarter earnings. In 2003, she blamed a first-quarter sales miss on shrinking U.S. demand and a third- quarter loss in Hewlett-Packard's PC division on ``overly aggressive'' price cuts to vie with Dell.

``There is work to be done,'' still to improve profits, Wayman said.

Profit in the printing group fell 3.6 percent to $932 million as sales of printer hardware declined 13 percent because of price competition, said Vyomesh Joshi, who runs the newly combined printing and PC operations, on the call with analysts. Operating margins in the unit narrowed to 15.4 percent from 16.4 percent. Sales rose 2.7 percent to $6.07 billion.

`Aggressive Action'

Hewlett-Packard will take ``aggressive action'' and cut prices on its low-end printers to compete against Lexmark International Inc., Seiko Epson Corp. and Canon Inc., Joshi said. That will weigh further on margins, he said.

``The approach of pricing and promotions is going to be very important to regain market share,'' Joshi said.

Some of those printers will probably be sold at a loss and the company plans to make money on its more-profitable printing supplies, Joshi said. Revenue from supplies grew 8 percent to $3.27 billion and accounted for 54 percent of sales in the printing group.

The PC unit's profit rose on sales of desktop and notebook PCs and more-profitable handheld computers, Joshi said. Sales rose 11 percent to $6.87 billion. Margins in the division were 2.1 percent, double the 1 percent achieved in the same period a year earlier.

Server and storage profit fell 54 percent to $71 million. Margins in that unit were 1.8 percent, compared with 4.1 percent in the first quarter last year. Software continued to operate at a loss and Hewlett-Packard said the business should break-even by the end of fiscal 2005.

Operating margins in the company's services business narrowed to 7.4 percent from 8.2 percent a year earlier as more clients bought less-expensive servers that cost less to maintain, Wayman said. That trend is likely to continue, he said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: February 17, 2005 03:43 EST