Carly Fiorina had begun to shake off concerns over Hewlett-Packard's execution capabilities. Thursday's earnings shock catapulted those fears back to centre stage. Ms Fiorina described the server and storage performance as ?unacceptable?, promising management changes in response to failings. These included botched discounting and problems with a new order processing system. But some investors were already worried about management depth at HP. Execution of a few executives in the offending areas will do little to bolster confidence.

HP remains sandwiched between Dell and IBM. Dell sets the benchmark in PC manufacturing while HP still makes virtually no money from PCs. Its rival, meanwhile, is pushing into the commodity end of the server market, eroding HP's market share. On the other side, IBM still outpaces HP when it comes to the more complex IT solutions business.

The crown jewel is printers. There, growth and margins remain strong. The division accounts for a large portion of HP's enterprise value. But the risk is that its success continues to be tarnished by lacklustre performances elsewhere. HP is positioned less comfortably than rivals if the economy's stutter continues. Thursday's 17 per cent slide in the shares was only marginally less extreme than the reaction to the Compaq merger in 2001. HP, on about 10-times next year's earnings, looks seriously cheap. But it already traded at a huge discount before yesterday, for good reasons.

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