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HP drives off manufacturers

Hewlett Packard's laptop division is reportedly losing friends in the manufacturing industry thanks to a series of low-margin orders that have seen manufacturers' profits take a nosedive.

According to an analyst from Goldman Sachs Asia, who was quoted in a Chinese-language report translated by industry rumour-mill DigiTimes, three of HP's biggest manufacturing partners have closed their doors to the company, forcing it to look elsewhere for someone to build its laptops.

Compal Electronics, Quanta Computer, and Wistron are all reported to have turned away HP's business, refusing to manufacture laptops for the company unless it raises its margins - a move which would force HP to charge more for its laptops at retail if it wants to keep its own profits intact.

HP, for its part, is reportedly refusing to bow down to the company's demands - and has partnered up with Flextronics, who are apparently willing to work on low margins, and have submitted a bid that was even lower than that Quanta was unwilling to shake on.

As a result of the move, Compal, Quanta, and Wistron are all thought to be adjusting their projections for 2011 to reflect lowered shipments of laptops - although the loss of a low-margin deal means that they should also report improved profitability.

HP, as expected, is keeping quiet on the analyst's claims - but if true, will need to keep Flextronics sweet lest it finds itself without a major manufacturing partner.