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18 May 2005 Hewlett-Packard's new CEO Mark Hurd yesterday delivered the first set of financial results since taking the helm at the technology giant. While the results showed modest improvement, Hurd has yet to detail his plans for HP.

HP reported a 7% increase in its second quarter revenue of $21.6 billion, a modest rise from $20.1 billion one year earlier. "HP had a solid quarter," said Mark Hurd, HP chief executive officer and president. "Nevertheless, our overall performance leaves room for improvement in many of our businesses."

Those areas of business in line for improvement are HP's storage unit - which saw revenues decline 6% compared to the year-ago quarter - and its services division, where operating margins were down.

"HP Services managed double-digit operating margins throughout 2003, and they reached 10% in Q4 last year, so there's clearly something going on here," said Douglas Hayward, senior analyst at Ovum.

Once again, HP's Imaging and Printing division was the bedrock for delivering revenue: it brought in $6.4 million, compared to $6.1 million a year ago.

And although Hurd referred to a thorough review of operational and cost structures being undertaken at HP, he steered clear of discussing the two issues that have dominated recent discussions about HP: the Compaq merger and possible spin offs.

Immediately prior to the announcement Wall Street had been rampant with rumours that HP might be about to write down its investment in Compaq - a tacit acknowledgement that the merger had not delivered the anticipated results. In the end no announcement was made.

Hurd also avoided the subject of a break up. Some market watchers are convinced that HP can deliver the best return for shareholders by selling off the lucrative printing division - a move so far resisted by HP's management.