How do we make sense of this picture? Michael Capellas agreed to sell his company, Compaq, to HP and spent a year fighting to get the deal approved. Then he walks after six months (of an expected 18-month transition) and is said to be in line for the top job at WorldCom, a scandal-ridden, bankrupt company in a depressed industry in which he has no experience. HP's CEO will not replace him, but will have a bunch more operational executives reporting to her.

Nervous investors dropped HP's stock 11% on Monday, apparently seizing on the obvious explanation -- that Capellas's departure means that HP's path may not be strewn with rose petals. Early stories quoted Capellas and Fiorina doing their best to spin the story of a smooth transition running ahead of schedule, with power now appropriately concentrated in Fiorina, backed by a managerial "deep bench" (as the Wall Street Journal and CNET quoted her).

Analysts quoted in the press seemed skeptical but unwilling to slam HP too hard. The San Jose Mercury News ran opposing quotes from industry watchers: "Not replacing him (Capellas) and having everyone report to Carly strikes me as a negative" vs. "The integration is anchored in 500,000 hours of work, not one person's head." The harshest comment Unspun found was this, quoted in the Journal: "We liked those two (Capellas and Fiorina) where they were, so without him, we'd have to take another look at the company." Thanks for the insight.

The Merc and theStreet.com drilled in on the competitive challenges facing HP, particularly from Dell, which recently closed a printer deal with Lexmark aimed straight at HP. But theStreet.com's analysts expected HP's quarterly numbers, due out next week, to come in on target. The New York Times quoted a stock-watcher's succinct comment: "Ultimately, good numbers conquer all."

HP confirmed the news of Capellas's impending departure after the Journal ran a piece Monday claiming that the HP president was the top candidate to replace departing WorldCom CEO John W. Sidgmore. Today the Times' Seth Schiesel took a close look at Capellas' suitability for the top job at the company one analyst (quoted in the Merc) characterized as "the Vietnam of corporate governance."

The Merc's Scott Herhold took the old-fashioned route to understanding Capellas's possible motive for leaving HP: money. A number of outlets reported that Capellas is walking out with $14.4 million in hand. Herhold plumbed the last SEC filing Compaq made as an independent company and concluded: "Capellas wasn't getting a bonus for staying. He was getting a bonus for leaving." Herhold concluded, "Don't pay attention to what executives say in a merger -- pay attention to how they fashion their paychecks." - Keith Dawson

H-P President Capellas Resigns, Confirms WorldCom Candidacy
http://online.wsj.com/article/0,,SB1037026206675861028,00.html
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HP: Sailing without a second in command
http://news.com.com/2100-1001-965343.html

Capellas' HP exit raises concerns
http://www.bayarea.com/mld/mercurynews/business/4499773.htm

Capellas' Departure Just Another Brick in H-P's Wall
http://www.thestreet.com/_tsclsii/tech/kcswanson/10053638.html

Top Hewlett Executive Resigns, Raising Doubts on Compaq
http://www.nytimes.com/2002/11/11/business/11CND-COMP.html

H-P's Capellas Leads List To Be CEO of WorldCom
http://online.wsj.com/article/0,,SB1036983737783218268,00.html
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A WorldCom Candidate, but No Telecom Resume
http://www.nytimes.com/2002/11/12/technology/12TELE.html

The fine print forecast Capellas' departure
http://www.bayarea.com/mld/mercurynews/business/4499786.htm

H-P's Capellas to Leave, Stock Drops (Reuters)
http://www.siliconvalley.com/mld/siliconvalley/4494035.htm

Michael Capellas' Next Move
http://www.forbes.com/2002/11/11/cx_ld_1111hp.html