I read this a lot on HN, and I've been doing a lot of hiring. Still, not only I've never encountered this case, but I have a lot of trouble imagining how one could get "impressive academic credentials" in CS without being able to write simple algorithms. Not that I don't trust you, but this is honestly beyond me.
Or maybe people lie more often than I expected on their resumes.
A student in IT uses google to search for google, then uses that to search for facebook. Another good student couldn't write a "separate the digits in a number" program. Another top student couldn't write a "selection sort and then select alternate elements" program. The top nerds use drag and drop programming. A friend who runs an IT outsourcing company told me about all the candidates with fake experience certificates who can't code a Hello World program.
All these people have impressive academic records - Good GPA, graduation from a reputed university, research papers, internships.
That's not to say everyone's like that, I've seen great programmers too in my college, but the majority of people I've come across fall in that category.