Oracle Declares War with HP By Hiring Hurd

By: Dian_L_Chu

In response to HP's suit against its former CEO Mark Hurd to block him from working at Oracle, Larry Ellison stated that

"Oracle has long viewed HP as an important partner...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."

However, when you add in Larry Ellison`s commentary blasting HP for the decision to let Mark Hurd go, one could make an argument that Larry Ellison has crossed the line with regard to appropriate conduct for a CEO, especially one who claims to hold the HP-Oracle partnership so dear.

Once the decision has been made by HP, and this is an internal decision for what HP feels is right for their company going forward, and HP has more information regarding the actions that Mark Hurd took that led up to his removal. The public negative statements by Ellison serve no purpose other than to weaken the partnership going forward.

This is HP`s business, they made a decision, Larry Ellison`s vitriolic statements were not going to change HP`s decision, it was final, so who is damaging the partnership relationship here? It is obvious that Larry Ellison doesn`t care about HP`s partnership, or joint customers. This is pure propaganda on behalf of Larry Ellison. The only reason he can get away with these type of over the top statements is because he owns his company and not accountable the way most CEO`s are with regard to professional conduct, and public statements.

In fact, Larry Ellison, if truly cared about the HP relationship, could have asked HP if they had any issues with him hiring Mark Hurd. Larry Ellison knew there would be considerable fallout from hiring Mark Hurd so soon after his leaving HP.

If anything he was trying to instigate a fued with HP, it’s like he was going out of his way to rile HP. This behavior is not exactly consistent with someone interested in maintaining a future cooperating partnership. Rather it is reminiscent of a direct competitor with a strategic move and an aim at taking market share in key categories and causing as much damage to HP in the process.

Ultimately, Oracle wants HP`s top talent, key customers, and even their shareholders as their predatory history suggests. So Oracle and Larry Ellison is no Saint in all of this, and their overt, explicit actions have formally declared war with HP.

But this is just the beginning of the major war within the big players in technology landscape, as there are not enough high margin areas for all to survive. So not only are the large firms going to gobble up the smaller firms, but the competition for top talent, key market segments, and future viability also means we will see further consolidation of the big players.

It is evident that there are now at least two major players too many to peacefully coexist in the technology space--too little high margin to go around.  In the end, some large player will have to take over another large player. So the current firestorm is really just a smokescreen. The real question is who is going to buy who in regards to the inevitable Mega Mergers that need to occur in the technology sector.

Disclosure: No Positions

Dian L. Chu, M.B.A., C.P.M. and Chartered Economist, is a market analyst and financial writer regularly contributing to Seeking Alpha, Zero Hedge, and other major investment websites. Ms. Chu has been syndicated to Reuters, USA Today, NPR, and BusinessWeek. She blogs at Economic Forecasts & Opinions.

© 2010 Copyright Dian L. Chu - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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