UPDATE 3-HP profit beats Wall Street targets; shares rise

(Adds CFO comment on pricing; geographic breakdown)

By Philipp Gollner

SAN FRANCISCO, Feb 19 (Reuters) - Hewlett-Packard Co (HPQ.N: Quote, Profile, Research) on Tuesday issued a quarterly earnings report and forecast ahead of Wall Street targets as it cut costs and sold more PCs and server computers, sending its stock up 5 percent.

The report of a 38 percent profit rise showed HP was able to manage through a difficult economy due partly to strong sales in overseas markets, which account for more than two-thirds of total revenue.

"That's now 12 quarters of beats, basically since Mark Hurd came in" as chief executive, "so there's a lot of credibility to the company," said Richard Sichel, chief investment officer at Philadelphia Trust Co.

"The majority of revenues come from overseas, so this shows they can do well, and if things are slow in the U.S. for the next quarter or two, they are still growing overseas."

Notebook computers, server computers and software all showed revenue improvement. Analysts noted some weakness in the printer division, where consumer unit sales fell 2 percent, although overall revenue rose in the division.

Net income in HP's fiscal first quarter ended Jan. 31 increased to $2.13 billion, or 80 cents per share, from $1.55 billion, or 55 cents per share, a year earlier. Revenue advanced 13 percent to $28.5 billion from $25.1 billion.

Excluding special items, profit was 86 cents a share, above an average analyst target of 81 cents. Analysts had expected revenue of $27.6 billion, according to Reuters Estimates.