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Declaring This a Year for Fixing and Rebuilding, H.P. Posts Lower Profit

SAN FRANCISCO — Hewlett-Packard may have gained running room, but it remains unclear if it can leap successfully to technology’s new post-PC world.

The world’s largest maker of personal computers, printers, and computer servers has struggled for growth in a world increasingly full of smartphones, tablets and cloud computing services. Anchored in the traditional hardware, H.P. is challenged by new devices, which it does not make, and cutthroat competition in its old low-margin businesses, which is pressing margins.

On Thursday, H.P. reported lower first-quarter revenue, profit and profit margins. Sales were down in all five of H.P.’s major businesses, which also include software and services.

Meg Whitman, the chief executive, declared in an interview after release of the results that “the patient showed improvement.” She said that H.P. is building a number of consumer and business products, including new kinds of laptops and low-energy servers for cloud computing, that will renew the company.

Positive sustained growth, however, is still a year away, Ms. Whitman said. “2013 is ‘fix and rebuild,’ ” she said. “All of the pipe we laid in 2012, and will lay in 2013, will show up in 2014.” Of smartphones, perhaps the biggest missing piece of H.P.’s portfolio, she would say only: “We’re still working on it.”

Bill Kreher, an analyst with Edward Jones, said: “H.P. is trying to cut fat while restructuring. Cutting costs and investing at the same time is tough. It’s a three- to five-year turnaround, probably, but the world isn’t stopping for them.”

H.P. said net income fell 16 percent, to $1.23 billion, or 63 cents a share, from $1.47 billion, or 73 cents in the period a year earlier. Revenue fell 6 percent, to $28.36 billion.

The results exceeded Wall Street expectations. Using the accounting methods preferred by analysts, H.P. reported net income of 82 cents a share, above the 71 cents a share predictions. Analysts also expected revenue of $27.8 billion, according to a survey by Thomson Reuters.

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Meg Whitman, H.P.’s chief executive, said the company showed improvement that will be seen in new products next year.Credit...Stephen Lam/Reuters

H.P.’s shares were up 5.85 percent in after-hours trading after the announcement. The stock had closed at $17.10, up 2.4 percent, in regular trading.

For H.P. and others in high technology, many traditional categories no longer fit the realities of how people use their gear. Smartphones have not been considered part of the computer business, for example, but are commonly used not just to cruise around the Internet, but also to access personal and corporate data in the cloud.

Servers were considered part of corporate computing, but ordinary people use them with every Google search and Facebook update. Tablets are used for gaming and watching videos streamed from the cloud, but also for dissecting corporate spreadsheets, often at the same time.

On Thursday, the research group IDC acknowledged this new reality by releasing data on a “smart connected device” market, as opposed to a market of PCs and laptops. When smartphones and tablets were included along with PCs and laptops, IDC said, H.P. went from market leadership to fourth place, behind Samsung, Apple and Lenovo.

Ms. Whitman acknowledged the changes, and said her company was responding. “The model is changing more rapidly than anyone thought,” she said. “We’re in a personal systems business. PCs and laptops are an important part, but so are tablets and smartphones.”

Last year, Ms. Whitman announced H.P. would lay off 29,000 employees over three years. About 15,300 of them are already gone, she said. She ascribed the company’s better-than-expected performance to “operational efficiencies” that contributed to cash flow of $2.6 billion, a 115 percent improvement over a year earlier.

Much of that cash, she said, is going into research and development for products, like data storage that works faster and cheaper by managing workloads across several machines, and printers that can scan and search the contents of documents.

On Tuesday, Dell, H.P.’s main American rival, said its first-quarter revenue fell 11 percent, to $14.3 billion, while net income was off 31 percent, to $530 million, or 30 cents a share.

Michael Dell, Dell’s founder, has proposed taking his company private, for about $24.4 billion, to focus on reorganizing Dell away from the eyes of Wall Street.

A version of this article appears in print on  , Section B, Page 4 of the New York edition with the headline: Declaring This a Year for Fixing and Rebuilding, H.P. Posts Lower Profit. Order Reprints | Today’s Paper | Subscribe

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