Hewlett-Packard and Oracle are burying the Mark Hurd hatchet after a two-week drama that could have led to a long court battle. On Monday, the tech giants reaffirmed their long-term strategic partnership and HP dropped the lawsuit over its ex-president and CEO's decision to sign on as co-president of Oracle.
As tech-industry history has it, HP filed a lawsuit seeking to block Hurd from joining Oracle's executive ranks after the PC maker forced his resignation in August in the wake of sexual-harassment allegations. HP claimed Hurd's hiring breached an exit agreement and put the company's trade secrets at risk.
Oracle CEO Larry Ellison rapidly fired back at HP with what sounded to some like a threat to withdraw cooperative efforts. Now it seems that's all water under the bridge. The companies may have a vested interest in jointly battling a common enemy: IBM.
"HP and Oracle have been important partners for more than 20 years and are committed to working together to provide exceptional products and service to our customers," said Cathie Lesjak, CFO and interim CEO of HP. "We look forward to collaborating with Oracle in the future."
Hurd Gives Up Some Compensation
HP seems satisfied with Hurd's pledge that he will protect HP's confidential information while fulfilling his responsibilities at Oracle. A filing with the Securities and Exchange Commission reveals that Hurd gave up about half the compensation HP owed him. Hurd willingly walked away from the right to 330,177 performance-based restricted stock shares, a well as 15,853 time-based restricted stocks.
HP's motive for dropping the suit -- a suit many legal analysts predicted HP would lose anyway -- may be deeper than avoiding strife with common customers. Although it's clear that it didn't benefit either company to battle over Hurd in court (to do so would risk worrying common customers who rely on the partnership to develop enterprise solutions), it may be technology that put an early end to the battle.
HP Needs Oracle
"If you take a look at the major systems vendors these days -- Oracle, IBM, Dell and HP -- Oracle and IBM both have obviously very sizable investments in middleware and their own stand-alone database solutions," said Charles King, principal analyst at Pund-IT.
"Since Dell is purely an x86 shop, its database of choice is Microsoft SQL server. HP is in a curious position of having a thoroughly sizable investment in enterprise-class Unix systems but has never really been able to do much in the way of assembling or properly managing a middleware portfolio."
As King sees it, the speed at which HP and Oracle ended the Hurd dispute may stem, in part, from the fact that HP doesn't have many other options. HP, he concluded, needs Oracle.