HP reported a nine per cent increase in net income to $966m during its first quarter with Mark Hurd as chief executive. The company also showed a seven per cent rise in revenue to $21.6bn.

Although some divisions showed their best performance since the 2001 merger with Compaq, Hurd warned against too much optimism.

"You will see us really work hard on the cost structure of the business to ensure that we deliver acceptable levels of profitability," he said in a conference call.

Hurd singled out the company's storage and software division as underperformers. The software business, which has OpenView and OpenCall as its main products, lost $6m in the quarter despite showing strong revenue growth.

Sales of storage systems suffered from a lack of dedicated salespeople, according to Hurd.

Although the new chief executive is happy with the sales of desktop systems, he insisted that there is more work to be done to ensure further growth and that he will further address the segment's cost structure.

HP's printer and imaging business, traditionally the company's strongest performer, saw higher unit sales following price cuts.

Colour laser printers and all-in-one units combining fax, printer and scanner showed strong unit sales, up 96 per cent and 61 per cent respectively.

The company makes most of its money in the printer business from the sale of toner and ink cartridges, which carry high profit margins. The aggressive pricing in the current quarter will lead to more revenue in the future, Hurd predicted.

"Although our accelerated pricing has a margin impact in the short term, it is the right thing to do for the long-term health of the business," he said.