updated 8/16/2007 7:55:22 PM ET 2007-08-16T23:55:22

Hewlett-Packard Co.’s third-quarter sales and profit breezed past Wall Street’s estimates as the technology bellwether continued to cash in on healthy sales of laptop computers and lucrative printing ink. Shares inched higher on a boosted financial forecast.

HP’s net income for the quarter ended July 31 was $1.78 billion, or 66 cents per share, a 29 percent jump from the $1.38 billion, or 48 cents per share in the year-ago period. Excluding one-time charges, the Palo Alto-based company earned 71 cents per share, 5 cents higher than the average estimate of analysts polled by Thomson Financial.

Sales for the period were $25.38 billion, a 16 percent increase from the $21.89 billion recorded a year ago. Revenues were more than $1 billion higher than the $24.09 billion in sales that analysts had been predicting.

The biggest sales jump came within the company’s Personal Systems Group, which includes desktop and laptop computers and is HP’s biggest source of revenue. Bolstered by laptop sales that grew 54 percent over last year, revenue within the segment grew from $6.92 billion last year to $8.89 billion this year.

Last fall, while HP’s boardroom spying scandal was publicly unraveling, the company reclaimed the title of the No. 1 seller of PCs worldwide from struggling rival Dell Inc. by exploiting its widespread presence in retail stores and consumers’ growing preference for laptop computers. HP commanded about 19 percent of the worldwide PC market in the second quarter compared with Dell’s 16 percent, according to market research firm IDC, citing the most recent data available.

Analysts have been concerned about a potential slowdown in HP’s Imaging and Printing Group, a closely watched division that includes the high-margin inkjet cartridges that have been long been the company’s cash cow. They have worried that Eastman Kodak Co.’s foray this year into the inkjet-printer market with lower-priced products could harm HP’s profitability.

But HP delivered a strong showing in the third quarter. Operating profit for the division rose 11 percent from $884 million to $981 million. The unit provided HP with nearly 40 percent of the company’s total operating profit.

Investors have strongly backed the leadership of Chief Executive Mark Hurd, whose cost-cutting measures included jettisoning some 15,000 jobs since he was appointed in 2005 and streamlining operations and improving profit margins.

That support has been reflected in a doubling of HP’s market value since Hurd was named chief executive after the tumultuous tenure of former CEO Carly Fiorina, who was fired in February 2005. HP’s market capitalization stands at nearly $121 billion today, reflecting the addition of nearly $60 billion in shareholder wealth under Hurd’s watch.

On Thursday, investors drove the stock up on higher financial guidance.

HP said it expects profit in the fourth quarter of 80 cents to 81 cents per share, excluding one-time charges, which is a few pennies higher than the 78 cents analysts were expecting. Sales are expected to be in the range of $27 billion to $27.2 billion, also higher than the $26.46 billion predicted by Wall Street analysts.

Anders Bylund, analyst with The Motley Fool, said HP was expected to churn out another solid performance and handily beat estimates in the third quarter, which is why the stock price rose only slightly on the report.

“It’s a very strong quarter but not much of a surprise — a lot of this was already baked into the stock price,” he said.

HP shares climbed 40 cents to $46.45 in after-hours trading. Before the results were released, the stock had closed down 10 cents to $46.05.

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