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Tom Foremski: IMHO

Tom Foremski
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Is Ellison trying to devalue HP prior to a bid?

By | September 7, 2010, 11:03pm PDT

Summary: Is Oracle using Mark Hurd to provoke HP? It looks that way…

Larry Ellison, CEO of Oracle, is a master media tactician, he knows how to press the right media buttons at (mostly) the right times.

I’ve seen him do it time and again when there is an acquisition target in his sights. Talk is cheap but it’s very effective when you can use it to hurt the value of a company. If you were to try to acquire a company in a hostile bid, talk is a primary weapon.

Is Mr. Ellison doing this to HP?

His response to Hewlett-Packard’s civil suit against Mark Hurd was extreme:

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.”

Wow. “…virtually impossible for Oracle and HP to continue to cooperate and work together.”

That’s a very hard response to a civil suit against Mark Hurd. It’s not filed against Oracle.

It seems clear that Larry Ellison is spoiling for a fight. The hire of Mark Hurd, along with his standard confidentiality contracts, was designed to provoke a reaction.

And now his response to the suit, virtually cutting off all business with HP, is very harsh. It will undoubtably affect HP’s business, and ultimately, its stock market valuation. A cheaper HP, leaderless, is an acquisition target. Since HP’s loss of its CEO, it has continued to slide in value while Oracle’s valuation has grown.

Will Larry Ellison use Mr. Hurd to mount a bid against HP? It wouldn’t surprise me.

There is more discussion on this topic here:

Could Hurd@Oracle mount a bid for HP?

More coverage:


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Topics

Tom Foremski, Hewlett-Packard Co., Ellison, Media

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 8 Talkback(s)

  • RE: Is Ellison trying to devalue HP prior to a bid?
    Interesting thought, but HPQ is still in the same ballpark market cap as Oracle and there will be a premium for acquisition. That's a lot to swallow just having gotten into the hardware business. On top of that there will be big anti-trust questions around a company that is already having trouble with the EU let alone trying to get this through US DoJ.
    ZDNet Gravatar
    johnnewton
    8th Sep 2010
  • RE: Is Ellison trying to devalue HP prior to a bid?
    @johnnewton

    True, it would be a big anti-trust question. But it would be just typical of Ellison and his big ego to think that he can ignore that -- as in fact he has been able to do for so long.
    ZDNet Gravatar
    mejohnsn
    8th Sep 2010
  • HP board are devaluing HP
    HP board beheaded the company over a dispute expenses claim for a hotel bill.

    You tell me, does beheading a company of a successful CEO do the damage, or does discussing the stupidity of beheading the company cause the damage?

    To me, the HP board are middle management idiots and Ellison and everyone else is right to point that out.

    At the very least they should have lined up a new leader and prepared a transition before they acted against Hurd.

    It's inept, incompetent, and their lawsuit has only reinforced that HP is currently rudderless with morons pretending to be captains.
    ZDNet Gravatar
    guihombre
    8th Sep 2010
  • he had to go
    @guihombre, ask any HP staffer what he thinks of Hurd and the picture they paint looks remarkably like a well-known red character with horns and a tail. The man is *loathed* by the rank-and-file, and I recently read an article saying that he'd decimated HP's R&D budget. I get the impression that the expense report was an excuse that the board had been seeking for a while to get rid of him. Wall St loved him because he cut expenses to the bone, but the benefits of that policy only last until the reservoir of existing products dries up.
    ZDNet Gravatar
    scripter
    8th Sep 2010
  • RE: Is Ellison trying to devalue HP prior to a bid?
    @guihombre

    Of course, HP is rudderless, for now. It's too big to operate without a CEO.


    However, to call Hurd a successful CEO is to make two common errors. The first is strategic -- Hurd did nothing more than carry out Fiorina's vision by acquisition. There really was no development. The second is about vision. If you look at how Hurd made the company's numbers look good for Wall Street, all you see is him hacking at the company to cut today's costs, with no basis for a future.

    Was he successful? I suppose it depends on your perspective. He raised share prices temporarily. However, he did so at the cost of the company's future.
    ZDNet Gravatar
    cuhulin
    8th Sep 2010
  • RE: Is Ellison trying to devalue HP prior to a bid?
    @cuhulin

    Well put.

    What do you expect from overpaid HIRED HELP. they have no skin in the game. Take the paycheck, and when the s--- hits the fan, they are not there to clean up. That is the curse of working for a publicly held company - "revolving door C level executives". As such, you have to constantly meet `Wall Street's` "expectations" or else you are a "failure". Corporate pr4eformance judged by ANALysts.

    Thank God, privately held companies do not have to put up with `Wall Street's` bulls---. They are PRIVATE for a reason. They do not have to answer to `Wall Street`.
    ZDNet Gravatar
    fatman65535
    8th Sep 2010
  • RE: Is Ellison trying to devalue HP prior to a bid?
    Maybe Mr Ellison should look at why nortel failed...you cannot keep buying up add hoc companies without integrating the ones you have...clearly he needs to hirer professional managers and prove a sustainable business model before taking the fight to IBM!

    The statement is not true...you need to understand that if he hints of acquisition speculators will jump in and push the stock up
    ZDNet Gravatar
    The Management consultant
    8th Sep 2010
  • RE: Is Ellison trying to devalue HP prior to a bid?
    i love this post, your style is just perfect you look amazing chanel bag 333
    ZDNet Gravatar
    yantangseo
    17th Sep

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