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The divergent fortunes of Dell and Hewlett-Packard were underscored on Tuesday after HP reported the latest in a series of strong quarters.

The performance was driven by rising margins and strong sales growth – two areas where Dell, its arch-rival, has stumbled.

HP made a profit of $1.5bn in its first fiscal quarter, up 26 per cent from $1.2bn in the same period last year. Sales were $25.1bn, an increase of 11 per cent from a year ago.

Mark Hurd, chief executive, praised what he called “solid progress” during his two years as chief executive. But he acknolwedged that HP faced tough competition.

“We are faced with a dynamic industry and we need to continue to execute with discipline,” he said. “I think the good news is, we are not confused about what we need to do.”

Although profits landed at the low end of the company’s forecasts, sales were better than expected. HP’s shares rose 0.8 per cent in after hours trading.

HP’s performance stood in contrast to that of Dell, which last month warned that its quarterly results would fall below forecasts – setting the stage for another disappointing performance when the company reports its results next week.

Dell last month ousted Kevin Rollins as chief executive, turning to Michael Dell, its chairman and founder, to put the company back on track after several quarters of stumbles. Dell on Tuesday said it had agreed to pay Mr Rollins a $5m severance package.

Shortly after his return as CEO, Mr Dell told his employees that the company would take steps to cut bureaucracy and speed decision-making in an attempt to overcome shrinking margins and slumping sales. But he warned that “we didn’t get here overnight and we won’t fix things overnight either”.

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