HP turnround plan begins to show results Hewlett-Packard shares surged in extended trading, boosted by better than expected second-quarter earnings as a five-year turnround plan began to pay off earlier than expected. "The patient is showing more signs of recovery, but we still have a lot of heavy lifting to do," Meg Whitman, chief executive, said in an FT interview. Net income fell to $1.08bn, or 55 cents a share, from $1.59bn, or 80 cents a share, a year earlier. But the world's biggest PC maker by shipments reported operating profits of 87 cents a share, ahead of Wall Street expectations of 81 cents, on revenues of $27.6bn. Ms Whitman said PC revenues fell by a fifth year on year against a backdrop of global unit shipments for the industry falling a record 14 per cent in the first calendar quarter, according to the IDC research firm. Consumers have been favouring smartphones and tablets over buying new Windows 8 computers. Ms Whitman said HP's strategy was to bring out different kinds of devices using different operating systems and processors. She pointed to an HP version of Google's Chromebook laptop and a tablet and hybrid device running on Android and Arm-based processors. Server revenues also suffered as HP's rival Dell cut prices to win market share. "Dell cratered their earnings by 75 per cent and were very aggressive in pricing and we chose to walk away from some of those deals because we wanted to preserve our operating margins," she said. "What Dell did may or may not be sustainable, I think it's what you do if you're going to go private," she said. Southeastern Asset Management, Dell's largest outside shareholder and an opponent of a proposed buyout led by founder Michael Dell, said on Wednesday Dell was deliberately sacrificing margins to gain market share. In a public comment on the company's latest results, it said the tactic was good for Dell's business while "scaring current investors and predictably generating the desired negative headlines in the near term." HP said the earnings surprise followed "the accelerated capture of restructuring savings and improvement in our operations." A better than expected performance in Enterprises Services and Printing arm also contributed, as revenues declined less than expected. HP shares were up 14 per cent at $24.20 in extending trading in New York having risen 49 per cent so far this year in anticipation of Ms Whitman bringing about a recovery. Ms Whitman said Dell would be hampered by its debt and pointed to HP's net debt falling $1.8bn to $2.9bn. She expected it to be close to zero by the end of the fiscal year. Cash flow from operations of $3.6bn rose 44 per cent on the previous year. The chief executive said Autonomy, which has been the subject of shareholder ire, was stabilising and had a good quarter, while 50 engineers had just been hired in the UK. The Silicon Valley company reported challenging conditions in Europe and China, but predicted earnings of 84 to 87 cents per share in the third quarter, ahead of analysts" average forecasts of 83 cents, compiled by Bloomberg.