Posted by Tom Foremski - September 7, 2010
Several weeks ago I asked if Oracle might try to acquire Hewlett-Packard, and I speculated that Oracle could hire Mark Hurd, the ousted CEO of HP, for the job of integrating the company.
At least one half of that scenario has occurred with Oracle saying late Monday that Mark Hurd has replaced Charles Phillips as co-president of Oracle.
Is the stage now set for Oracle to mount a bid for HP?
- HP remains leaderless and that makes it vulnerable to be acquired.
- HP would provide Oracle with enormous and highly profitable consolidation opportunities with its Sun Microsystems acquisition.
- An Oracle/Sun/HP plus the 45 plus other acquisitions over the past 10 years, would make a company capable of competing against all of IBM. It would create a West coast versus East coast tech rivalry that would span the globe.
(Chart is from Stephen Jannise at Software Advice.)
However, an acquisition of HP by Oracle would be terrible for HP staff and for Silicon Valley's already high unemployment rate. Tens of thousands of people would lose their jobs (especially all the anti-Hurdists at HP).
HP has a market value of about $93 billion compared with about $95.3 billion in the wake of Mr. Hurd's departure. Oracle stands at $121 billion, a $5 billion increase over the same period.
Yes, it is a big pill to swallow however, it would enable Larry Ellison, CEO and co-founder of Oracle to perform an end run in the massive global IT market and also leave a substantial legacy on his upcoming retirement.
If there is one thing we know about Larry Ellison is that he is motivated by big goals. Is this one too large for him?
That's for him to decide.
UPDATE: If Oracle is serious about going after HP it will begin a campaign of trying to devalue HP in a war of words. This may have already begun.
This morning HP said it had sued Oracle over the employment of Mark Hurd in a civil complaint that he has violated prior agreements to keep HP trade secrets confidential.
Oracle responded with:
“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."
HP could lose large amounts of business. The announcement was made after the close of markets. It will be interesting to see how investors react on Wednesday.
It will be interesting to see if Oracle makes further comments about HP that could lead to a loss of investor confidence in the company.
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Therese Poletti speculated that Mark Hurd could end up at Oracle just hours before the news was announced.
Last week, a little-known analyst quietly unearthed some interesting news about Oracle. Ryan Hunter, an analyst with Wedge Partners, a firm with offices in Edgewood, Colo., and New York, wrote in a report that Charles Phillips, co-president of Oracle, has lost some of his turf, and speculated he could be on his way out.
Phillips, an Oracle co-president along with Safra Catz, was replaced as the head of global business units by Bob Weiler, a former CEO who came in via an Oracle acquisition, Hunter said. Weiler is the former CEO of Phase Forward, a developer of applications for life sciences and health care acquired by Oracle in April for about $685 million. The change leaves Phillips responsible only for sales and marketing, Hunter said.
"Usually when you see this type of boardroom shuffle, it's not a positive sign," said Hunter. "Oracle said they are just reshuffling the deck but they didn't really justify it." Hunter added that if Phillips were to depart, it would not be a big negative for Oracle.
Also, Wall Street Journal caught wind of it on Sunday: