madison

Tom Foremski: IMHO

Tom Foremski
Home / News & Blogs / Tom Foremski: IMHO

Could Hurd@Oracle mount a bid for HP?

By | September 7, 2010, 10:54am PDT

Summary: A leaderless HP is vulnerable to an acquisition. Could Hurd plus Oracle make it happen? The anti-Hurdists at HP had better watch it…

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. The market has shown that a leaderless HP is worth less, and it has boosted Oracle considerably.

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.

—

Please see:

Larry Dignan: Can Oracle, Hurd topple HP, IBM without services? | ZDNet

Dennis Howlett: Questions for Oracle | ZDNet

Kick off your day with ZDNet's daily e-mail newsletter. It's the freshest tech news and opinion, served hot. Get it.

More from “Tom Foremski: IMHO”

Topics

Hewlett-Packard Co., Oracle Corp., Mark Hurd, Therese Poletti, Weiler, Mergers & Acquisitions, Corporate Law, Investment, Finance, Business Operations, Tom Foremski

Tom Foremski reports on the business and culture of Silicon Valley at the intersection of technology and media.

Disclosure

Tom Foremski

Tom Foremski is the editor and publisher of Silicon Valley Watcher and Silicon Valley Watch. Tibco Software is an advertiser.

Biography

Tom Foremski

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.

Tom arrived in San Francisco in 1984, and has covered US technology markets for leading computer journals around the world.

Talkback Most Recent of 22 Talkback(s)

  • RE: Could Hurd@Oracle mount a bid for HP?
    leaderless?.....what is a leader worth for anyways....gimme a break here please....we all know what leadership these CEO honchos and big shots provide....Please they are not your next door Bill gates, larry page or Steve jobs.....

    The non-tech guys and MBA holders who go onto become CEOs dont know a thing about technology and run the company as if they invented computers!.

    please leave the Tech companies to Tech guys ONLY !
    ZDNet Gravatar
    bhasinusc@...
    7th Sep 2010
  • RE: Could Hurd@Oracle mount a bid for HP?
    @bhasinusc@...
    Wah! Yamada cried. T_T Thanks a lot for this! rolex replicas happy
    ZDNet Gravatar
    yantangseo
    17th Sep
  • I'm really not sure how to put this,
    because your analysis leaves me almost speechless. First off, there's a difference between a CEO and an emperor. Hurd was a manager, not the embodiment of the company. There are a dozen other execs at HP who would rank in the Fortune 500 if their divisions were separated out. There are some good candidates out there at smaller companies, people forget that Hurd came from a similar background.

    From a financial standpoint, the numbers involved do not add up. It would take 110 billion dollars minimum to acquire HP, assuming it was a "friendly" takeover, making it the largest non-financial merger in history. A hostile takeover would be almost impossible to finance, even Ellison's pockets aren't that deep.

    HP's market value is less than Oracle's for a major reason: HP has less than half the net margin than Oracle. There would have to be a hell of a lot of "synergy" to make up for that. Because Ellison owns so much Oracle stock and the stock would take a huge dilution hit EBITDA-wise, his personal fortune could potentially get cut in half from a merger. Why on earth would he do something like that?

    Synergy? There is 100 percent overlap in all hardware product lines with Sun. Other than legacy services, you could instantly devalue 80 percent of the Sun acquisition. That's synergy? If Ellison wants synergy, he should buy Dell, which has little in the way of overlap with UNIX offerings, but much to offer in complementary Microsoft platforms. Dell himself is on the way out, unable to rescue the company he started.
    ZDNet Gravatar
    terry flores
    7th Sep 2010
  • As HP did to Compaq who did unto DEC ... ?
    I don't think that Ellison is interested in repeating the all-too-glaring mistakes of the past. Despite his arrogant attitude, he is a fairly smart guy and I'm sure he has paid close attention to tech history.

    Oracle/Sun was a wise choice, and fit together reasonably well.

    Oracle/HP would be much more difficult to arrange, their businesses far harder to swallow, and might just choke both companies... with both IBM and SAP standing in shadows just waiting for any sign of weakness to pounce.

    I don't see how it would make business sense, and though a big-mouth, Ellison's certainly no fool with the empire he built.

    Regards,
    Jon
    ZDNet Gravatar
    JonathonDoe
    7th Sep 2010
  • RE: Could Hurd@Oracle mount a bid for HP?
    I don't like Ellison's arrogance, so HP should go for Oracle instead of the other way around. Or maybe Microsoft should go after hardware and be a more complete company ala Apple. They could get in the fray by going after one of the three mentioned: HP, Oracle (Wouldn't Ellison hate that), or Dell.
    ZDNet Gravatar
    dhays
    7th Sep 2010
  • Any merger the size of what you have mentioned
    may not make it through DOJ/SEC review. Oracle owning SUN is one thing, but buying up yet another competitor may not sit well with the government
    ZDNet Gravatar
    John Zern
    7th Sep 2010
  • That just means they have to payoff a couple more puppet congressmen
    @John Zern - Nothing that can't be bribed into being.
    Enough money to the right traitors and anything is possible.
    ZDNet Gravatar
    Reality Bites
    8th Sep 2010
  • Neither company could raise the financing to "buy" the other
    @dhays

    Mergers of this size have to be mutual affairs because nobody can raise the 100 billion in cash to "buy" the other one. Stock swaps are about the only way, and that takes reasonable cooperation from the stockholders. Ellison might be able to dictate to Oracle stockholders, because he personally owns a huge chunk of it. But HP is one of the most widely held stocks on the NYSE with some concentration in institutional hands but not that much.
    ZDNet Gravatar
    terry flores
    7th Sep 2010
  • And please tell us
    How would such an acquisition possibly help the end users these corporations are supposedly in business to serve? It begs the question, what are the driving forces and motivations behind these multinational conglomerates anyway?

    Oh that's right, self-enrichment. Silly me for thinking of anything beyond the obvious.
    ZDNet Gravatar
    klumper
    7th Sep 2010
  • Supposedly in business to serve end users?
    @klumper

    That is what open source is for.

    Corporations are required by law to make money for the shareholders, not to serve the customers or society at large for that matter. It just so happens that often the two work hand in hand, but not necessarily so.

    Self-enrichment brought us from an agrarian society to where we are today. Socialism/communism have been tried and did not work so well.

    Gates, Buffet and others are giving away most of their wealth to charities or for charitable purposes. Maybe you should take off your blinkers and stop bitching.
    ZDNet Gravatar
    Economister
    8th Sep 2010
  • You need to lay off the kookaid.
    @Economister - Wow do I have a couple hundred bridges to sell you. How utterly gullible are you????

    I'll bet you still believe in the tooth fairy too. Give me a break and grow up. The gates and buffet trusts are to do one thing only.... Cheat on Taxes.. Duh!
    ZDNet Gravatar
    Reality Bites
    8th Sep 2010
  • He reminds me of Linus with blanket and thumb
    @Reality Bites

    Economister is one of those green eared, lucre chasing types that lie at the feet of Gates and other mega capitalists in worship, like a fawning puppy in starry eyed wonder. He doesn't like it when anyone challenges his pantheon of overpaid brat idols. Imagine how he feels witnessing Hurd the turd smacking the curb.

    Some of these guys will never learn. Best to leave them to their thumb sucking approbations, and other wet dreams.
    ZDNet Gravatar
    klumper
    8th Sep 2010
  • RE: Could Hurd@Oracle mount a bid for HP?
    Why should Oracle want to build something like IBM - which is synonymous with Legacy - the opposite of Oracle/ SUN?
    Looking closely at Oracle's previous acquisitions, I think Larry is not after building an Empire; Oracle is a technology driven company - and every acquisition brought them new technology / complemented the Oracle DB platform.
    HP does not have any new great technology that Oracle/ Sun does not have with the exception of smart phones. HP has its feet wet / dirty in the mobile/ smart phone business with Slate and Palm. This could be of interest; but this is really a small piece of HP. Why should anybody want to swallow all of HP just for this piece? This does not make sense.
    Still there are few reasons why Oracle would be interested in HP.
    1) There was this HP-UX/Oracle thing in the past. But I wonder how much of that matters now.
    2) Then there is this really good Printers business of HP for anybody wants to build an empire.
    3) HP now has a big services business after its acquisition of EDS + Mphasis. That can add lot of head count if Larry wants to feel good as an emperor! Then again, that wing of HP is married to Mr. Gates or, so it appears at this point of time.
    The other acquisitions that make / do not make sense are:
    1) Acquiring Dell helps if they want to do the desktop business. Even then, they need to acquire a Desktop OS company or push Linux aggressively. It is hard to visualize Larry selling Windows with his PCs!
    2) If Oracle wants to play the mobile game, they would rather target somebody like Motorola.
    3) What really makes sense for Oracle is to target other enterprise applications that help sell them more Oracle DB licenses. JDA/ i2 is the first thing comes to my mind. Now Oracle has ERP and CRM and Supply Chain makes good sense. Lately BPM is gaining prominence. So, targeting something like Pega makes even more sense.

    IMHO, the focus at Oracle should be to push hard UNIX as a dominant server OS. That is where the critical success lies for them; Microsoft sells so much because everybody is using their OS.
    Empires are meant to be defeated. Ideas are what makes real difference in peoples lives and they live.....longer.
    ZDNet Gravatar
    Nagesh Tummala
    8th Sep 2010
  • Leaderless??? More like whew! the retards are gone!
    HP has been subjected to a succession of retarded klutz morons ranging from psychopaths like Carly, to Hurd the moron.

    HP is much better off without the parasite at the top.
    ZDNet Gravatar
    Reality Bites
    8th Sep 2010
  • RE: Could Hurd@Oracle mount a bid for HP?
    I also desire to signal in your RSS feeds. Thank you as soon as once again and maintain up the great operate! nccma cooler
    ZDNet Gravatar
    MACKENZI
    10th Sep
View More Comments

Talkback - Tell Us What You Think

Formatting +
BB Codes - Note: HTML is not supported in forums
  • [b] Bold [/b]
  • [i] Italic [/i]
  • [u] Underline [/u]
  • [s] Strikethrough [/s]
  • [q] "Quote" [/q]
  • [ol][*] 1. Ordered List [/ol]
  • [ul][*] · Unordered List [/ul]
  • [pre] Preformat [/pre]
  • [quote] "Blockquote" [/quote]
Click Here

The best of ZDNet, delivered

ZDNet Newsletters

Get the best of ZDNet delivered straight to your inbox

Facebook Activity

Blog Roll

Blog Archive

White Papers, Webcasts, & Resources