Hewlett-Packard has announced its third- and fourth-quarter earnings would badly miss estimates primarily because of problems in its server and storage division.
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HP's enterprise servers and storage division saw third-quarter revenues fall 5% from last year to $3.4bn (£1.8bn).
Breaking down the results, HP said there was a 32% decline in Alpha server revenue, a 25% decline in NonStop server revenue, and more than a 15% drop in storage revenue.
Three top managers in the company's server and storage division paid the price for the poor results. Peter Blackmore, head of business sales, and two other employees, one in the US and one in Europe, were let go. Blackmore was the highest-ranking former Compaq employee at HP.
HP chief executive officer Carly Fiorina blamed some of the problems in the division on migration to a new SAP system that shut down production for six weeks instead of the planned three weeks. She also cited channel problems in Europe for the division's poor results. She said the company's server and storage division is expected to return to profitability in the fourth quarter.
HP said its other divisions showed sales gains this quarter. The company announced it earned 24 cents a share on revenue of $18.9bn in the third quarter, a 9% increase from the 2003 third quarter.
The HP news came just as Dell announced strong results with many products in similar markets. Dell's revenue rose to $11.71bn, up from $9.78bn for the third quarter a year earlier.
Bob Francis writes for Infoworld