Achtung investors: The

Hewlett-Packard

(HWP)

turnaround party has been rescheduled for 2002.

H-P

met Wall Street's vastly lowered earnings expectations for its fiscal first quarter ended Jan. 31 Thursday after the close of regular trading. And that's where the good news, such as it is, ends. Revenue came in below already skeptical estimates. Worse, the company pointedly told analysts and investors that it didn't expect business to get any better for the rest of the year.

Interestingly, H-P said that it saw an uptick in demand in January, relative to December. But the outlook that H-P gave on its conference call confirms the worst fears investors had formed after the company

warned last month: There's just no way H-P is going to get revenue to grow anywhere near 15% for the foreseeable future. Fiorina reiterated the company's sales growth guidance of low- to mid- single digits in the fiscal second quarter. And beyond? "Visibility remains extremely limited," Fiorina said. "We are not counting on a return to double-digit growth this year."

Same story on the bottom line. On the conference call, CFO Robert Wayman encouraged analysts to slash their estimates for fiscal 2001. "We are not comfortable with guidance out there at this time," he said. "There's an expectation that there'll be model adjustment on the downside." Analysts had expected the company would earn 40 cents a share in second quarter, which ends in April, according to

First Call/Thomson Financial

. For the fiscal year, they figured it would earn $1.70 a share.

In the first quarter, sales in H-P's imaging and printing systems division -- the unit that provides the lion's share of the company's business -- showed no growth from the prior year. PC sales stank, with revenue in the computing systems segment rising just 2%. Pricing pressures caused H-P to lose money in PCs.

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None of that is surprising. The difficulties experienced by

Lexmark

(LXK)

have publicized the weakness in the market for low-end printers, and the near-total vaporization of demand for PCs is well known by now. But to make things worse, H-P showed extremely lackluster growth in one of the fastest growing computer hardware markets around, Unix servers. Unix sales grew just 6% at H-P, well below the growth rates experienced by every one of its competitors, most notably

Sun Microsystems

(SUNW) - Get Report

.

It's not just the economy, stupid. H-P was plagued by execution issues in its server business, where the company's salespeople were competing against its own channel resellers. "Our own sales team has becoming increasingly aggressive, as we like them to be," Fiorina said. "In some cases, that caused them to wander into a space where our channel partners were for some time." Translation: Customers were getting two sales calls trying to sell them the same H-P products. Fiorina claimed that H-P had issued its salespeople "new rules of engagement" involving who owns which accounts.

H-P also became the latest hardware company to write down the value of its plunging Internet investments. The bill totaled $365 million, or a charge of 15 cents a share.

H-P's missteps in the quarter, beyond the general economic difficulties so many tech companies are presently facing, represent the latest in a string of blows to the credibility of the company's management a team led by Fiorina, whom H-P brought on board to lead the company back from the wilderness in the summer of 1999. There was

last August's spat with analysts over how the company was measuring its revenue growth; there was the 10 cents a share earnings miss in the third quarter; there was the

maintaining of guidance at the 15% to 17% level at its November analyst meeting, a level many observers found unrealistically high.

See you in 2002.