HP has announced financial results for its first fiscal quarter ending 31 January 2007 with net earnings of $1.5bn, an impressive 26 per cent year-on-year increase.

As notebooks continue to become a more attractive option over desktop PCs, desktop revenue declined one per cent but notebook revenue grew an astounding 40 per cent over the prior year period.

HP's Personal Systems Group reported a strong rise in overall unit shipments of 19 per cent.

Analysts have suggested that this huge jump is eating into Dell's market share, which is already feeling put upon as it continues to lose ground in the PC market.

Shaw Wu, an analyst with American Technology Research, said: "HP clearly gained a lot of share. We were expecting strong results in PCs but we did not expect them to be this strong.

"HP is basically beating up Dell more and more, and there is room for it to gain more share. From Dell's perspective that could be very scary."

Mark Hurd, chairman and chief executive at HP, said: "HP delivered a strong first quarter, with improved margins and solid revenue growth across our businesses.

"We have a lot of work and opportunities ahead of us. I am confident we can continue to execute with discipline and deliver a year of strong financial returns."