NEW YORK (CNN/Money) - Hewlett-Packard Co., the No. 2 personal computer maker, Tuesday reported better-than-expected earnings and sales for the latest quarter.

The company also reaffirmed Wall Street's sales and earnings estimates for the second half of its fiscal year, sending shares sharply higher in after-hours trading.

HP, which merged with Compaq a year ago, said it earned $659 million, or 22 cents a share, in the quarter, more than double the $252 million it reported before the merger was completed last year.

Excluding one-time charges for restructuring and amortization of assets related to the merger, the company said it earned 29 cents a share, two cents above analysts' estimates, according to First Call.

Sales fell to $18 billion from $18.2 billion a year ago (including Compaq) but came in better than average forecasts of $17.7 billion.

HP gained 17 cents, or 1 percent, to close at $17.05 in regular trading Tuesday, and the stock surged 7.3 percent to $18.30 in after-hours trading, according to Instinet.

HP (HPQ: Research, Estimates) stock is up more than 11 percent since the Nasdaq hit its lowest point of the year on March 11, but has lagged behind competitors Dell (DELL: Research, Estimates), IBM (IBM: Research, Estimates) and Lexmark (LXK: Research, Estimates) during the tech sector's rally.

Investors seemed to be thrilled that HP did not issue a sales warning for the next quarter, as it did when it reported first-quarter results in February. Although HP did not give specific guidance for its third quarter, the company said that it expects to report sales of $36.4 billion and earnings, excluding charges, of 62 cents for the last half of this fiscal year.

That matches Wall Street's estimates. Analysts expect HP to post sales of $17.4 billion in the third quarter and $19 billion in the fourth quarter, with earnings of 27 cents and 35 cents a share, respectively.

Nonetheless, HP Chairman and CEO Carly Fiorina said during a conference call that the company did not see any near-term catalysts for improving demand in information technology (IT) spending. This echoed similarly guarded statements made by HP competitor Dell when it reported first-quarter results last week.

What's more, Fiorina added that a massive PC upgrade cycle is in the cards any time soon. "There is no killer app. There is no Y2K that will drive customers to upgrade at the same time," she said.

As a result, CFO Bob Wayman said during the conference call that HP expected to layoff 3500 more workers by the end of its fiscal year in October. HP eliminated 2300 jobs in its second quarter and finished with 141,000 employees, down from 153,000 a year ago.

But the report provided several other things to cheer as well. HP's second-quarter sales were slightly higher than the fiscal first quarter's $17.9 billion in revenue, thanks to sequential sales gains in its consulting business and enterprise division, which includes sales of servers and storage to corporations.

HP once again posted an operating profit in its PC division and narrowed losses in its enterprise segment. That unit nearly broke even, posting a $7 million loss compared to an $83 million operating loss in the first quarter. HP announced a restructuring of its enterprise division earlier this month.

And, although sales in HP's biggest division -- printing and imaging -- dipped slightly in the second quarter, margins were 16.6 percent, up from 16.2 percent in the first quarter.

Fiorina said that with the Compaq merger a year behind it, HP's main focus will now be on continued sales growth, not just cost-cutting. "HP is no longer an integration story," she said.

However, Alex Vallecillo, senior portfolio manager with National City Investment Management, which subadvises the Armada family of mutual funds, said that HP's sequential revenue gain was mainly due to the weak dollar, not improving demand for tech or any big market share gains by the company.

In fact, HP said that revenue would have been 2 percent lower in the quarter if not for currency effects, as 55 percent of its sales come from outside the Americas.

"It's hard to say how much progress the company's really making," said Vallecillo. National City owns a small amount of HP in one of its Armada funds.