HP has reported a rise in profits of 14 per cent over the past quarter, despite a drop in revenues of 8.4 per cent. Overall revenue fell to $30.8bn (£18.5bn) from $33.6bn (£20.3bn) last year but profits rose from $2.1bn to $2.4bn (£1.27bn to £1.45bn).

The vendor logged a bad quarter in the four traditional areas of its business, all reporting a fall in revenues but a rise in profits. However, revenue in the services division rose by eight per cent and cost cutting by the company had a positive effect on the bottom line.

"HP's solid performance in services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010," said HP chief executive Mark Hurd.

"Our operational execution and improving cost structure generated strong quarterly and year-end results. We expect to outperform the market due to our significant scale, broad portfolio and market-leading position."

The services division, which includes EDS, saw profits rise by more than five per cent to $1.4bn (£848m). Hurd said that the integration of EDS is ahead of schedule, and that the division had seen an increase in new contract signings.

HP's PC division had a tough quarter, with profits hurt by discounting prices. Shipments were up by eight per cent overall, but revenues fell by 12 per cent. Desktop PC sales were hardest hit, showing a decline of 16 per cent, double the fall for laptop sales.

Overall server revenues fell by 17 per cent and, while blade systems revenue fell only eight per cent, more specialised systems were harder hit. Business critical systems revenues fell by a third.

HP's printing division suffered the most, however. Overall revenues fell by 15 per cent and shipments by 20 per cent. Commercial printing hardware had a particularly bad quarter, logging a fall in revenues of 38 per cent.

Hurd said that the "economy remains challenging", but that the company is seeing "encouraging signs of recovery".