Hewlett-Packard Company (HPQ): Falling Morale, Should You Invest?

HP went on a spree of acquiring technology instead of developing it internally, and gutting R&D. Decisions were (and still are) made on the basis of lowest cost without putting value on things like ease of use or user appeal.

HP has lost a lot of talent to other tech companies, as dissatisfied employees abandon ship.

A succession of CEOs have further hurt HP with a series of value-destroying acquisitions — especially Leo Apotheker’s vast overpayment to acquire British software maker Autonomy. When I recently mentioned that Wall Street seems to have brightened around HP’s prospects, and questioned whether morale around the company had improved, my friend replied dryly, “Morale around the office is directly correlated with the stock price.”

Often times, when a CEO cuts costs dramatically, it is to bolster short-term results, and cash out his massive number of stock options. Sadly, when you become suspicious that such a phenomenon is taking place, you’ll likely do well to sell your shares as upper-level management does.

Google Inc (NASDAQ:GOOG) and Wynn Resorts, Limited (NASDAQ:WYNN) are leaders in their industries and have very high morale amongst their associates. HP shares have dipped dramatically, and this is definitely in part a function of employee morale.

One of my criteria for my long-term investments is high morale among employees.

Margie Nemcick-Cruz owns shares of Google. The Motley Fool recommends Google. The Motley Fool owns shares of Google.

The article Deteriorating Morale and Stock Price at Hewlett-Packard originally appeared on Fool.com.

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