Farewell, Fiorina

Wall Street has sent Hewlett-Packard's (NYSE:HPQ) stock up about 7% in trading thus far on news that embattled CEO Carly Fiorina is leaving. Is it time to buy Dow 30 component HP?

Fiorina was hired six years ago to "revitalize and reinvigorate the company." That sounds like an ad for a spa treatment, right? Well, it has not been a relaxing time at the spa.

Look at this 10-year chart of HP's stock performance. Initially, there was euphoria as earnings grew. The stock surged to a high of $69.00 a share in June 2000. Declining earnings sent the stock to a low of $10.75 in June 2002 -- a stunning 84% drop in two years.

In May 2002, HP tried to invigorate its PC business with the purchase of Compaq. But with this unheralded acquisition, and its associated debt and share count increase, the company never experienced the growth or profitability enjoyed by competitor and Motley Fool Stock Advisor recommendation Dell (NASDAQ:DELL).

While per-share earnings are expected to return to near-2002 levels this year, the stock, at yesterday's closing price of $20.14, is trading at an affordable 18 times earnings -- and it's still 70% below its 2000 price.

Those rejoicing at Fiorina's departure should take a close look at what she accomplished. Five years ago, the company decided to invest heavily in establishing technological leadership. In five years, the company climbed to fourth place from 16th on the list of organizations receiving the most patents. An example of that investment is last week's announced discovery of technology that could replace the transistor, showing the company is dedicated to leadership in computing.

Those rallying the stock today might want to consider Fiorina's parting words: "While I regret the board and I have differences about how to execute HP's strategy, I respect their decision." So, what are those differences? The only clue in the press release is that the board looks "forward to accelerating execution of the company's strategy." Did anyone not expect that?

Fiorina leaves the company with a defined strategy and a solid technical base. While the company is looking for a new CEO, Wall Street has little to work with in determining new expectations. With the company's stock trading for the same earnings multiple as longtime rival IBM (NYSE:IBM), there is little reason to expect the stock to outperform the market (or its peers) until new leadership establishes a track record.

Fool contributor W.D. Crotty does not own stock in the companies mentioned. Click here to see The Motley Fool's disclosure policy .