"We are not satisfied with our consumer hardware performance in the first quarter, and we will take aggressive action to correct this in the coming quarter," said Vyomesh Joshi, who runs both HP's printer and PC businesses.

Analysts said HP is likely to focus its considerable resources on sales of printers that also scan, fax and copy, called all-in-ones, a segment in which Lexmark has done well in recent years.

"The news is bad for Lexmark," said analyst Shannon Cross of Cross Research. "There has been growth at the sub-$100 level and HP has started putting products out there, but there is the need to take prices down to compete more effectively."

As a result of a 13 percent decline in HP's consumer printer hardware revenue, versus a 16 percent rise by Lexmark in its most recent quarter, HP may also give additional incentives to retailers, offer rebates or boost the number of HP representatives roaming stores to woo consumers.

Analysts said it's too soon to tell whether HP's move will be countered by Lexmark and by Dell, which sells Lexmark inkjet printers under the Dell brand. Pricing action could also come from other players including Epson or Canon, which have said they intend to take U.S. share in photo printers.

By: DocMemory
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