IT giant Hewlett Packard said yesterday that its cost cutting drive and the performance of its services division helped push profit up 7% during its most recent financial quarter, even though revenues fell 8% to $30.8 billion.

During the three months ending October 31 2009, profit from HP’s services arm amounted to $1.4 billion, up 50% compared to the same quarter of fiscal 2008, while revenues for the division grew 28% to $8.9 billion, according to the company’s financial report.

All other units of HP’s business saw a decline in revenues and flat or shrinking profits. This demonstrates the timeliness of the company’s acquisition of services company EDS in May 2008, without which HP would have suffered a disastrous year.

As it is, the company’s yearly revenues fell by just 3% compared to fiscal 2008, down to $114.6 billion.

Another boon to the business was its China operations, revenues from which grew 20% in the fourth quarter.