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HP vs Mark Hurd & Oracle: The Machiavellian Version

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As someone who enjoys the spectacle of a good corporate fight and shameless mud-slinging, it’s fun to see the aging pachyderms of Silicon Valley duke it out in the courts, and by extension in the press. Given Larry Ellison’s very public and vocal support of ex-HP (s hpq) CEO Mark Hurd, it wasn’t much of a surprise that Oracle (s orcl) hired him as co-president. Less than a day later, HP — its nose tweaked — decided to sue Hurd and Oracle. They gave a litany of reasons, many of which were covered by Mathew yesterday. It’s expected that a fight this juicy is getting a lot of press.

The big question on my mind is: What’s the real story? I mean, Hurd, Oracle and Ellison had to know that HP would respond with a legal action of some sort. This lawsuit is really par for the course; if HP didn’t sue, that would have been a surprise. So clearly, Hurd and Ellison have mapped out the entire scenario very carefully, and they must have engaged legal help here. Those two are way too smart to not have planned for this and built strong defenses. I’m pretty sure Hurd has an ace up his sleeve, or he wouldn’t be risking his awfully generous settlement package.

As a result, I have come up with a Machiavellian theory about what that game is (and remember it’s just a theory) that goes something like this:

  • Oracle appoints Hurd; HP gets angry and sues Oracle, Hurd.
  • The lawsuit forces HP and its senior management’s entire attention on stopping this clear and present danger to their business.
  • Oracle continues to work, as Larry is still the king of that castle. Hurd leads the fight against HP. His intimate knowledge of HP allows him to direct pin-pointed legal attacks at his former employer.
  • Hurd wants HP to air his so-called dirty laundry, only to prove that HP essentially pushed him out. (Okay this one is maybe a stretch.)
  • The legal hostilities drag HP’s attention away from hiring a CEO.
  • All this mud-slinging spooks some of the outside candidates for the top job at HP. I mean, if you’re considering a gig at that company and you see it going after Hurd with hammer and tongs… you’re going to think twice.
  • HP ends up picking an internal candidate, which essentially causes fissures in the senior ranks and turns the company into a series of fiefdoms.
  • Chaos at HP essentially helps Oracle.

If you watched the breathless bidding for storage provider 3PAR (s par) with HP paying almost twice as much as what Dell (s dell) initially offered, you know the company is losing fiscal discipline. Sure, the 3PAR deal came on HP’s radar during Hurd’s tenure, but the price it paid shows that the company needs to get a grip. I not sure Larry’s taunting is going to help. In a statement released late afternoon on Tuesday, Ellison did his best to poke HP in the eye:

“Oracle has long viewed HP as an important partner,” said Oracle CEO Larry Ellison. “By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees.  The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace.”

I bet there’s more to come. Like you, I am ready for the show!

Photo of fighting elephants via YouTube video by YT user, gecco01.

17 Responses to “HP vs Mark Hurd & Oracle: The Machiavellian Version”

  1. Nimish Mehta

    Interesting theories! I am not sure I completely agree that the move to hire Mark Hurd was that Machiavellian. Here is another theory (although nowhere near as controversial as yours):

    Larry wants to continue to 1) cut costs, and 2) increase revenues.

    1. Mark Hurd knows how to cut costs – no doubt.

    2. Larry has a product / corporate vision to increasing revenues. The vision stems from a belief that too many $$ are spent in implementation of complex enterprise software. The trick to increasing revenues therefore is convert some of these implementation $$ to product license $$. The way to do this is to create integrated appliances – hardware + software combined. Remember his close friend, Steve Jobs, heavily subscribes to this theory with mind boggling success. But who or what says this vision can’t be applied – at least to a degree – in enterprise?
    If Larry truly believes that integrated appliances (hardware / software) are the future, then he needs the expertise of a Mark Hurd (and others) to make this a reality.

    If Larry accomplishes both of these (cut costs further and create appliances in some area of his product lines) then it would definitely bode well for the company.

  2. chipsnsalsa

    I agree we’re seeing moves that have been considered before they are played. That said, I disagree with the proposed scenario, and that Ellison/Hurd are omniscient and invulnerable.

    First, if you’re an Oracle shareholder, wouldn’t you be a “little” concerned that your main platform partner has now been “called out” to the back alley by your CEO? Who does that after the 7th grade? Geez! We’re seeing such different levels of credulity here between HP taking a very reasonable and responsible step to safeguard its strategic roadmap, and Oracle sticking out their tongue and picking a fight that will only drag BOTH companies down.

    Second, is Mark really worth all of this fuss? All you have to do is get a good CFO and a decent data warehouse, and any CEO can follow Mark’s strategy. Cut entitlements (and any benefit WalMart doesn’t offer it’s employees), fund growth from current spend, don’t listen to your executives, shrink costs at a constant rate per year, etc. This is grad school financial analysis. Not rocket science (actually DNA cloning would solve a lot of problems for Mark, but we’ll stick with the hypothesis that this is simple). If EPS improves, then that’s all you need to worry about. What Hurd appears to do that you don’t see outside the military, is carry a general staff in his suitcase that follows his mandates without question. It’s a really nice suitcase, too. I believe it has rollers and an airhole, and one day will be covered with corporate logos for those places he’s “visited”.

    Third, it must be LOVE, then, that is driving Ellison to put Oracle through this on behalf of Hurd. What does that say about Ellison…”I can’t get my company to do what I need it to so I’ll bring Mark in and he’ll figure it out?” Really? That’s what you want to world to think? I think, actually, that Ellison DOES get what he wants out of Oracle. And, as a pal, Mark would have been happy to serve on the BoD to provide needed guidance on how to pursue specific strategies and drive growth in certain segments and products. Taking the step to name him as President indicates a belief by both parties that this is going to be a happy, committed, and long term marriage. Now, let me check that track record again…

    Last, let’s be clear about something. The one way to ruin a friendship is to go into business together. This process of stabilization between Oracle and HP will pass and soon be seen as a pothole in the rear-view mirror (assuming Larry can stop venting via public statements and midnight emails). There’s too much at stake for both companies to risk what has been a very profitable relationship. The road ahead for Oracle/Ellison/Hurd will be the real show to watch. Even GPS won’t be able to guide them around the boulders and canyons waiting for them on the road they’re travelling. It’s tough to bury your foot in the throttle of your V12 Mercedes under those conditions. I think they’re both individuals who expect to get their way without question. Maybe that was too subtle, let me say it again…WITHOUT QUESTION! Will be interesting to see if the Oracle headquarters adds a boxing ring annex to the boardroom when this is all said and done. Full-contact Tennis anyone?

  3. Ronald Stepp

    “So clearly, Hurd and Ellison have mapped out the entire scenario very carefully, and they must have engaged legal help here.”

    Well, Mr. Hurd isn’t THAT smart considering how he ended up at Oracle in the first place.

  4. As far as conspiracy theories go..this one is good, but not water-tight.

    Firstly, HP is not a direct competitor of Oracle. So, why pick on them? Also, HP lacks s*x appeal and so it’s unlikely that Larry picks on them. Yes, it was HP that slapped the court case and Oracle is merely responding. Is Oracle gunning for a new partner – a Dell or a Acer (or some other competitor of HP)? Even that doesn’t make a lot of sense given that Oracle is not in any great symbiotic (read Wintel like) relationship with any one, let alone HP.

    Also, seen from the HP side, HP would rather hire a new President to fight Mark/Larry (that is, assuming they still have some change left after the 3PAR party) and a new CEO to fight Acer, Dell, and the other real competitors. yeah, they would need 2 people to replace Mark, but that shouldn’t be impossible.

    My own anti-climactic theory is that Larry and Mark are friends and Larry is being nice. If Larry had a grouse with HP, he would rather have had Mark (or a confidante) in HP instead of out of HP. Looks like the HP board ran out of patience with Mark and found an excuse to show him the door. And that is not without consequences. And HP will find a way to deal with it. Or not. But there is not much more to it.

  5. Many folks in HP like Randy Mott, Todd(PSG Chief) must quote and join Oracle as well. They don’t deserve to be at HP.

    #1 TURD like laying off people. Cutting Salary and Benefits of employee while increasing his own bonus 400%.

    This is what our wallstreet like and they rate a CEO who does #1 as best CEO.

    #2. What wallstreet does now know is how an engineering company works. Engineering & Tech company works with quality workforce. During hurds tenure with HP, employee iteration was highest of all. ok why should you care of employee as an investor the bottom like is quality folks makes a better product.

    #3 What is Larry’s mind for TURD: Offcourse TURD is his best friend that happend Since TURD joined HP(Note this).

    #4 Who knew TURD Before HP,

    #5 Does anyone know anything about HP. Can someone ask TURD why during his tenure the (Printer) business took a dip. Note that printer business in HP was largest profit making business always. TURD just picked battel with high performing VP of printer business and screweed up the entire business. This proves that he failed to lead as Engineering company.

    #6 Larry must be aiming to make Mark Hurd as CEO in next few years and take an retirement but first Mark has to prove with his BBA background that he can lead an engineering company. Note that Larry still know how to install Oracle DB. Mark hurd even can’t spell what is RDBMS and so as wallstreet.

    It would have been wise for Larry to keep emotions into control and acted wisely. What it looks now he wants a plight with his most valued patner. Lets see who will win and who will loose.

  6. Does HP really know what they are up against in taking on Ellison, the Earl of Arrogance? He has much deeper coffers to weather a long and protracted court fight, he has a proven track record at getting what he wants, no matter what the fight entails (PeopleSoft, SJO landings with his MIG, Woodside house design/construction, America’s Cup, four wives and counting….), and he has a rather unique and combative style that you just can’t count out. This guy not only loves but seems to live for warfare of any kind. And he just doesn’t lose…ever. Good luck HP Board, you’re gonna need it.

  7. does not larry know never take paterners fired CEO’s. Its like he married one of his close friends wife. Larry is clearly stupid. he should have kept his friendship with TURD as away from business.

    He needs business 101 lession.