Should HP investors be worried or relieved over executive churn?

Departures accelerate in recent weeks as CEO Leo Apotheker tightens his grip

Credit: Photo credit: hpnews/Flickr

When a new chief executive joins a company, change in upper management is inevitable -- especially when the company is struggling.

So it's certainly no surprise that there have been a number of high-level changes at Hewlett-Packard since Leo Apotheker took over last Nov. 1.

(Also see: Will Leo find the HP leaker?)

But as the Wall Street Journal points out on Thursday, the pace of departures appears to have accelerated since HP's recent downgrading of its financial expectations for the fiscal year.

At least 10 executive vice presidents and senior vice presidents have left H-P since Mr. Apotheker joined the company in November, with many of those exits taking place in recent weeks. ...

Some executives are leaving over unhappiness with Mr. Apotheker's strategy and moves, said people familiar with the matter. Others are departing because they were forced out or retired, these people said.

Apotheker apparently isn't leaving these positions vacant for long. According to the WSJ, he "has already filled several senior posts and another 15 executives are close to joining" the computer maker, whose shares (NYSE: HPQ) are down 14 percent since the former SAP co-chief executive took over the position vacated last August by former HP CEO Mark Hurd in the wake of sexual harassment and expense-account allegations.

It's hard to tell from the outside what's happening inside a large corporation, and the executive departures from HP almost certainly are a combination of housecleaning and exodus.

Either way, the massive turnover in the executive ranks have to be unsettling to investors in the short term. Not only do new executives (especially those brought in from the outside) need to get up to speed, it takes time to determine if they're the right people for the jobs.

Further, how does one make a distinction between assertive leadership and blundering overreaction?

The truth is, no one will know until there are results. It's still too early in Apotheker's tenure to determine if his strategy of building up HP's services unit, particularly cloud computing, will pay off. (And even beyond the actual strategy, questions about execution will remain.)

Bottom line: HP shares will continue to languish in the foreseeable future. If I were a long-term investor, I'd be pretty conflicted about what to do now.

I'd love to hear readers -- HP shareholders or otherwise -- weigh in.

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