NEW YORK (CNN/Money) - Shares of Hewlett-Packard Co. fell Friday after a wire service reported that a top HP executive said revenue and profit at its services unit were "well below plan" and that the proxy fight over the company's merger with Compaq Computer was affecting productivity and customer decisions.

Shares of HP (HWP: down $0.83 to $17.67, Research, Estimates), a component of the Dow Jones industrial average, fell more than 5 percent in early trading, weighing on the broader market.

The decline was prompted by a Dow Jones Newswire report late Thursday quoting an internal HP memo saying that "incoming order levels remain very soft" at the unit and that results could suffer in the fiscal second quarter, which ends on April 30.

The memo was dated March 18 and came from the office of Ann Livermore, president of HP's services unit, according to the report.

HP Services accounted for about 20 percent of HP's total revenue in its latest fiscal year, according to the report. Wall Street analysts polled by earnings tracker First Call expect HP to report earnings per share of 25 cents in the current quarter.

Related links       Hewlett-Packard HP claims victory in Compaq fight

An HP spokesman on Friday declined to comment on the memo or the current status of HP's services division.

Livermore told the wire service that her memo was a regular quarterly "rallying cry" she sends to managers at the services unit. She would not comment on the unit's performance, aside from saying that she was "absolutely, one-hundred-percent proud and thrilled" so far, according to the report. She also pointed out that most of its revenue usually is booked at the end of the quarter.

Shareholders of the Palo Alto, Calif.-based computer maker voted Tuesday on whether or not to approve a planned merger with Compaq (CPQ: down $0.37 to $10.40, Research, Estimates). Though HP CEO Carly Fiorina claimed victory over dissident director Walter Hewlett in the proxy fight, it will be weeks before the votes are tallied and certified.

Compaq shareholders voted Wednesday on the merger and approved it by a 9-to-1 margin.

Should the deal go through, the combined company would be the world's second largest supplier of computer hardware and information technology services behind IBM (IBM: down $1.02 to $105.76, Research, Estimates).

Earlier this month, credit rating agency Standard & Poor's cut its rating on HP, saying that while the Compaq merger would be strategically valid, the risks posed by the transaction offset the positives. The company is still on "creditwatch" because of lingering uncertainty about the merger.