Computer sales have been weaker than expected in recent months and losses suffered by Hewlett-Packard have increased dramatically since its merger with Compaq in May, the world's largest personal computer maker has said.

"All of us [in the computer industry] are seeing a few new signs of weakness," said chief financial officer Bob Wayman.

Low demand for computers from companies was blamed for the weak sales during the May to July months.

While HP's $2.3bn loss for the three months were blamed on merger costs.

If HP and Compaq had not merged, their combined loss would have been capped at $116m.

Meeting targets

But HP's earnings rose to $420m from $320m a year earlier, and the integration of HP and Compaq was on track, HP insisted.

HP believes the merger should deliver cost savings of between $2.5bn and $3bn during 2003.

"Throughout the first 100 days, we've kept our eye on the ball," said chief executive Carly Fiorina.

"We're hitting all our integration milestones and are on track to meet our second-half targets."

HP shares fell 64 cents to $14.21 on Tuesday, ahead of HP's announcement.