While many HP’s other business units turned in disappointing or mediocre performances during the company’s first fiscal quarter, its personal systems group saw sales up 17% year-on-year, lifting the overall company performance.

For the three months ended January 31 2007, HP reported net revenue of $25bn, up 11% year-on-year, with GAAP net income up 26% at $1.5bn.

HP said that its Personal Systems Group had enjoyed a robust holiday season, and saw unit shipments rise 19% and consumer client revenue grow 28% year-on-year. The PS Group is HP’s largest division, accounting for 34% of the company’s overall revenue.

The bumper Christmas sales were clearly made at the expense of Dell, which saw its PC shipments slide all through last year, as a result of exploding laptop batteries and other problems.

During the fourth quarter, Dell’s shipments in the US , which usually account for more than half of the company ‘s business, fell by 17% year on year. Only this month, Micheal Dell returned to the CEO’s post at the company in an effort to right the listing ship.

But while HP’s PSG group was doing so well from Dell’s problem, the giant’s other divisions did not perform so well. HP’s services division and its enterprise storage and server business saw only 5% growth. These two categories together account for just over a third of HP’s business.

HP’s imaging and printing sales grew by only 7%, as did its software sales, when excluding the effects of HP’s November purchase of Mercury Interactive Corp.

On the server side, revenue from HP’s x86 powered servers rose by 10%, but revenue from high-end business critical servers fell by 6%, because the continuing slide in sales of PA-RISC and Alpha-powered boxes wiped out the benefits of a 75% increase in the sale of HP’s Itanium-powered Integrity servers.

This has happened despite the introduction of Montecito chips and a new OS for the Integrity boxes.

HP CEO Mark Hurd said he would spare the conference call from the list of multiple reasons for this weakness in high-end servers.

We just had a weak quarter. I can’t be any clearer than to say that I’m just disappointed, Hurd said.

The storage story was no better. Overall storage revenues were up just 3% year-on-year, with HP’s mid-range to high-end EVA array yet again saving HP’s skin. EVA sales were up 18%, while sales of tape gear, and high-end disk arrays OEM’ed from Hitachi Ltd shrank.

For its current second fiscal quarter HP said it expects to see revenue of around $24.5bn, with GAAP EPS of $0.57 to $0.58. The company said that Wall Street consensus had been for $24.1bn FQ2 revenue.

Because of the bumper Christmas, HP was able to bump up its guidance for the full fiscal year slightly. It now expects revenue of $98bn to $99bn, when it had been expecting $97bn. The forecast for non-GAAP EPS is now $2.60 to $2.65, and was previously $2.48 to $2.53.

HP also announced a pensions rework that will see it freeze its pension payments to current employees, from next January. That will deliver HP a one-time pension curtailment gain of $500m, and it will use that money to finance an early retirement scheme that will offer 3,000 current employees the chance to retire early, on May 31 this year. For the those that do not take up the offer, HP will raise its contribution to their pension schemes from 4% to 6%.

Many of the people who take up the early retirement offer will be replaced, Hurd said, stressing that the scheme will not significantly affect total headcount. HP said that the new pension set-up will deliver a one to two cent increase to profit in fiscal 2008 as well as fiscal 2007.