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And its sales team has been pinching reseller business

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Hewlett-Packard has reported net profits of $727 million for its Q1, a 12 per cent fall from the $825 million it made for the period a year earlier.

The results matched the lowered expectations HP warned of in January. The company has also said it will only achieve single digit sales growth this year.

Sales for the quarter were $11.9 billion, a 2 per cent rise on the $11.7 billion posted a year before.
Chief Executive Carly Fiorina blamed a "deterioration in the U.S. economy" for the performance. "Clearly, this was a tough quarter and our results reflect that," she said.

Fiorina also owned up to a disaster in its server channel sales policy. Resellers, which had exclusively been selling HP, had now started selling other brands because HP salespeople had started encroaching on their business. This was down to her push to spur on the HP server sales teams, and cutting back on reseller spending programs. Competitors were boosting their dealer schemes at the same time.

HP is now protecting its reseller's customers from HP sales people and adding extra funding to its dealer program.

The results also revealed HP's Superdome Unix server isn't making money fast enough. Turnover from high-end Unix boxes fell 54 per cent from Q1 a year ago, mid-range sales grew 8 per cent, and low end Unix tin jumped 55 per cent.

Sales from business PCs and Intel servers were down 11 per cent. Notebook sales were up 54 per cent. Printer sales were down 4 per cent in the US but up 5 per cent around the rest of the world. US sales fell 6 per cent. Europe grew 6 per cent.

The results included a $365 million charge stemming "from impairment of investments in emerging market companies" and a $102 million charge for scrapping 1,700 marketing positions. ®

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