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HP's shares were hammered during Wednesday trading as investors reacted to a poor showing in the company's third quarter.

HP's stock fell 10.45 percent to close at $19.80, while rivals and the overall market were flat. The vendor was punished by poor margins in its PC business in the third quarter and then taken to task by investors and analysts. Even 'The Loon' chimed in to confirm HP's poor showing.

"HP badly missed its quarter, falling back into the habit of alternating good and bad reports," Merrill Lynch's Steven Miloonovich writes in a report. "This quarter had elements of the squeeze between Dell and IBM that we fear long term. We believe Dell's PC execution remains superior and IBM is gaining enterprise market share."

The Loon tends to dress conventional wisdom up as "insight," and this helped him out in the quarter. Just about every industry watcher has warned of the Dell/IBM squeeze since HP first announced its intentions to buy Compaq.

Dell proved it has HP's number today with a series of price cuts. The Dell direct model continues to eat away at the low end of HP's PC and server lines.

On the mid-range and high-end where some engineering is required, IBM has made a huge push against HP. IBM has the momentum here, and it must give Carly cause for concern. ®

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