The company posted profits of $760 million, or 73 cents per share, compared with $710 million, or 72 cents per share, last year. Wall Street analysts surveyed by First Call were expecting profits of 73 cents per share after revising estimates downward.
For the three-month period, HP had revenues of $11.4 billion, up from $10.3 billion for the same period in 1998.
Excluding expenses related to the spin-off of Agilent Technologies, HP said that earnings from operations reached 75 cents per share.
"We really tested the ability of the organization to respond and it did. The business performance issues we face are not new, and it will take some time to address them. What is new is the amount of attention that management is paying to them," Carly Fiorina, HP's CEO, said in a conference call.
Hewlett-Packard has not been able to keep up with competitors such as Sun, in terms of revenue growth. Sun's sales rose 25 percent in the recently ended quarter, bolstered by demand from fast-growing Internet companies. A good portion of HP's sales growth came from its printer business.
"Sun Micro has been gaining at HP's expense for some time," Bill Milton, an analyst at Brown Brothers Harriman, told Bloomberg.
Fiorina said she has challenged management to meet goals of 12 to 15 percent revenue and profit growth in fiscal 2000. To spur employees on, Fiorina said a new compensation plan is now in place for the top 100 managers that measures performance against HP's best performing competitors.
Fiorina also noted that the company is working to cut $1 billion out of its operational costs through a reorganization. That money will be used to improve its sales force and to fuel strategic research and development activities.
Last month, HP dampened expectations for quarterly revenues and said several high-level executive positions were being shuffled in an attempt to increase cooperation across HP's divisions.
The revision was needed because of poor North American sales of PCs and servers in conjunction with delays in components needed to build PCs following the Taiwan earthquake.
Revenues for the fourth quarter grew by 10 percent, matching HP's revised guidance.
Fiorina yesterday announced a $200 million advertising and marketing campaign along with a new logo intended to polish the 60-year-old computer company's image and highlight HP's technological innovations.
Bloomberg contributed to this report.