NEW YORK (CNN/Money) - Hewlett-Packard, the world's second largest maker of personal computers, reported solid gains in sales and earnings for the latest quarter Tuesday as corporations again boosted spending on computers and servers.

The Palo Alto, Calif.-based company reported net income of $884 million, or 29 cents a share, for its fiscal second quarter, up 34 percent from net income of $659 million, or 22 cents a share, a year earlier, sending its stock up nearly 3 percent.

Excluding acquisition-related charges, HP reported a profit of 34 cents a share, in line with analysts' expectations. The company reported earnings of 29 cents a share in the same period last year after factoring out similar types of charges associated with HP's 2002 merger with Compaq.

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HP posted sales of $20.1 billion, ahead of the Wall Street consensus estimate of $19.3 billion, according to First Call. Revenues were 12 percent higher than last year's quarter and 3 percent higher than its fiscal first quarter sales.

"These results demonstrate that we are winning and growing across the portfolio in an intensely competitive market," said HP chairman and CEO Carly Fiorina in a statement.

The company also raised sales guidance for the remainder of the year, saying that it now expects sales for its fiscal third and fourth quarters to come in at a range of $39.7 billion to $40.7 billion. Current analyst estimates are $39.7 billion. HP said it would meet analysts' earnings targets, excluding charges, of 74 cents per share for the second half of the year.

HP did not give specific guidance for the fiscal third quarter, however. Analysts are expecting earnings of 32 cents a share, excluding charges, compared to 23 cents a year ago. Sales are forecast at $18.7 billion, up 8 percent from the same period last year.

HP (HPQ: Research, Estimates) stock jumped nearly 5 percent in after-hours trading after rising 1.7 percent in regular trading on the New York Stock Exchange Tuesday.

The Dow component's stock has fallen about 13 percent this year due largely to concerns about a PC price war with its top competitor Dell as well as increasing pressure from Dell in the server and printer businesses.

Dell reported strong sales and earnings growth last week and downplayed concerns about aggressive pricing in the PC business. Dell retook the market share lead in PCs from HP in the first quarter. However, Dell's profit margins were a bit lower than analysts were expecting due to an increase in the price of memory chips. That appeared to hurt HP as well.

Operating profits in HP's personal systems business, which includes PCs and handhelds, came in at $45 million for the quarter, down from $62 million in the first quarter. The unit reported a profit of $23 million a year ago. Sales in the division fell 3 percent sequentially to $6 billion, but were up 17 percent from last year.

HP's so-called "enterprise division," which includes sales of servers and storage, software and services to large corporations, reported an improvement in operating earnings and sales from a year ago. Starting on May 1, results from all these businesses will now be included in a new group called Technology Solutions. But HP also broke down the individual results for these three separate segments.

Profits from storage and servers jumped to $120 million, from $58 million a year ago as sales increased 8 percent to $3.98 billion. HP's software division, however, reported a loss of $49 million on sales of $222 million.

Services was a particularly bright spot. Sales rose 10.5 percent sequentially and 15 percent year-over-year to $3.5 billion. Operating profits came in at $329 million, an 11 percent annual increase and 27.5 percent jump from the first quarter. The company cited improving results from its customer support and consulting parts of the services business for the profit increases.

The results may temporarily satisfy skeptics who had thought that HP could swing into the red in the PC and server and storage divisions.

But one fund manager said that HP still needs to do a better job of boosting profit margins in the business, as opposed to just doing everything it can to win market share. Margins in the personal systems business slipped below 1 percent while margins from servers and storage were only 3 percent.

"I can respect the fact that HP wants to fight for market share but at some point they need to make money. We need to see them work to improve the margins in the PC and enterprise businesses," said Chris Staneluis, portfolio manager with National City Investment, which owns shares of HP.

The company's most profitable division, printing and imaging, posted a 10.6 percent increase in sales from a year ago and 30 percent jump in operating income. Profits from printing accounted for 69 percent of the company's overall operating income.

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However, profit margins in the unit dipped again in the quarter, to 15.6 percent. Margins were 16.3 percent in the second quarter and 18 percent a year ago.

Interestingly, HP reported a decline in its inventory levels from the first quarter, a contrast to many techs, including Dell, which have been aggressively building up their inventories. HP's inventories fell 3 percent sequentially to $6.27 billion. During a conference call with analysts, HP chief financial officer Bob Wayman said he was comfortable with this inventory level as the company gets ready for its fiscal third quarter, usually its weakest of the year.

But HP, like Dell, also said that growth from outside the U.S. was a big reason behind the strong results. Sales in the Americas increased just 4 percent from a year ago.

Revenues in Europe were up 17 percent while Japan and Asia-Pacific sales increased by 21 percent and 22 percent respectively. HP generated 59 percent of its total sales from outside the Americas in the quarter and the company said that if not for favorable currency exchange rates, total sales growth would have been just 4 percent.

Fiorina said during the conference call that corporate demand for tech was improving but that "pricing remained competitive" and that "customers remain demanding and discriminating."