Feb. 19 (Bloomberg) -- Hewlett-Packard Co., the world's largest personal-computer maker, posted first-quarter profit and sales that beat estimates and raised its annual forecast on demand overseas, spurring a 6.5 percent gain in the stock.

Revenue will climb to as much as $114 billion this year, compared with a previous forecast of $111.5 billion, Hewlett- Packard said today. Excluding some costs, first-quarter profit was 86 cents, exceeding the 81-cent average of projections compiled by Bloomberg.

Hewlett-Packard won orders for PCs, storage and servers. The company, which has trounced Dell Inc. in PC shipments for six quarters, now looks to international customers for 69 percent of its sales. That has helped Chief Executive Officer Mark Hurd withstand a U.S. slowdown in spending that has hurt other technology companies, including Cisco Systems Inc.

``Their guidance was much more bullish than we thought it would be, particularly with what we've seen out of Cisco,'' Pacific Crest Securities' Brent Bracelin said in an interview. ``Their outlook suggests that things aren't as bad as people thought.'' The Portland, Oregon-based analyst rates the shares ``sector perform.''

First-quarter net income rose 38 percent to $2.13 billion, or 80 cents a share, from $1.55 billion, or 55 cents, a year ago, the company said today in a statement. Sales in the quarter ended Jan. 31 rose 13 percent to $28.5 billion.

Stock Performance

The shares rose as much as $2.86 to $46.81 in extended trading after closing at $43.95 on the New York Stock Exchange. Palo Alto, California-based Hewlett-Packard had dropped 13 percent this year.

``U.S. consumer was not quite as robust as we've seen in the past, but globally we saw a pretty strong market over all,'' Hurd said today on a conference call. He attributed the performance to Hewlett-Packard's mix of geographic regions and products, as well as cost savings from cutting jobs, merging data centers and paring back on real estate.

Hurd also said the addition of 2,000 salespeople last year helped the company woo more customers. Still ``we're very under- represented in the market,'' particularly in the U.S., Hurd said. ``We think we have a superb line up of products and capabilities, and it's frustrating to us because we know we come to work everyday and know we under distribute them in the market.''

Concern about a cutback in U.S. spending has led investors to punish the shares of technology companies, including PC rivals Dell and Apple Inc. John Chambers, CEO of networking-equipment provider Cisco, said earlier this month that a slowdown in spending may last ``several'' months.

Still Confident

The company is ``confident'' in its ability to expand sales and profit, Hurd said. Earnings, excluding some costs, will rise as high as $3.54 a share this year, compared with a top range of $3.37 before, Hewlett-Packard said. Analysts on average projected earnings of $3.37 on sales of $112 billion.

Hurd, 51, has topped his profit forecasts in each quarter since succeeding Carly Fiorina in April 2005. The company projected sales of as much as $27.9 billion this quarter, with profit of up to 84 cents a share. Analysts on average anticipated sales of $27.5 billion and profit of 82 cents.

Hewlett-Packard's PC sales rose 24 percent last quarter to $10.8 billion after unit shipments jumped 27 percent. Notebook sales climbed 37 percent, while desktop PC revenue increased 15 percent. Earnings at the PC unit rose 52 percent to $628 million.

Profit Margins

The profit margin, or profit as a percentage of sales, widened to 5.8 percent from 4.7 percent a year ago. Hurd called the PC sales growth ``pretty darn strong.''

Hewlett-Packard has added orders from the fastest-growing economies in Brazil, Russia, India and China, with a 35 percent increase in sales from those countries. They represent about 9 percent of total sales.

``They are capitalizing on the international better than anyone else,'' said Jane Snorek, who helps manage more than $70 billion in assets at First American Funds in Minneapolis, including Hewlett-Packard shares. ``They're taking share from Dell and I think they're taking share from IBM, and I think that's going to continue.''

Hewlett-Packard's PC shipments rose 23 percent in the calendar fourth quarter, compared with a 17 percent gain at Dell, according to researcher IDC in Framingham, Massachusetts.

Servers, Printers

PCs account for about a third of Hewlett-Packard's sales. The company also benefited from a decline in the cost of parts for PCs. Citigroup Inc.'s Richard Gardner estimated that memory prices fell as much as 45 percent last quarter.

Hewlett-Packard also is winning corporate orders for blade servers, compact versions of the computers used to run business networks and Web sites. The company dominates the market for blades, the fastest-selling type of servers in the third quarter.

Sales of servers and storage devices rose 9 percent to $4.82 billion. Blade servers led that unit, with an 81 percent increase in sales. Software revenue jumped 11 percent to $666 million.

Sales of printers and supplies such as ink rose 4.5 percent to $7.31 billion. The unit was the company's most profitable, with earnings rising 7.2 percent to $1.15 billion. The profit margin widened to 15.7 percent from 15.3 percent.

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

Last Updated: February 19, 2008 18:48 EST