Let’s all kick HP while it’s down!


image: CNNMoney.com

Another day, another high-profile CEO blasting HP for no apparent reason.

First Oracle CEO Larry Ellison jabbed at HP for firing Mark Hurd. Okay, the dude’s Hurd’s buddy, so that makes a certain amount of sense. 

Then IBM CEO Sam Palmisano criticized HP for cutting research and development spending over Hurd’s tenure. Uhh… Sam? Did you notice that IBM’s R&D spend was flat over that period? Yeah, thought not.

Then it was Larry’s turn again, e-mailing the Wall Street Journal on Friday that he was “speechless” over HP’s decision to hire Leo Apotheker as its CEO, noting that Apotheker “was recently fired because he did such a bad job of running SAP.” He called on HP’s board to “resign en masse … right away.”

Larry, Oracle beat SAP. Years ago. Time to move on. Seriously.

And then, curiously Tuesday was Jack Welch’s turn. Yup, former GE CEO Jack Welch. Because, you know, the world was waiting to hear what he had to say about HP’s board.

Alright, lay it on, Jack.

"The Hewlett-Packard board has committed sins over the last 10 years," Welch said at the World Business Forum in New York, according to news reports. "Where the hell was the leadership development? Who are these board members?"

Great point on leadership development, Jack. Because, you know, your protege, Jeff Immelt, has done such an amazing job as GE’s CEO. Shares are only down 56% since he took over. Nice work!

Let’s all agree that HP has made a few curious decisions in the past two months. But maybe it’s time for non-HP CEOs to take a deep breath and think about their own (many) mistakes before beating up HP after it’s been KO-ed. -David

Leo Apotheker?

Wow. HP surprises the tech world and goes outside the company to name former SAP CEO Leo Apotheker as its new CEO. Wonder if Todd Bradley and Ann Livermore will stick around? HP also named Ray Lane as its non-executive chairman. Lane used to be at Oracle and was once thought to be a leading contender to succeed Larry Ellison. So with former HP CEO Mark Hurd now at Oracle and Lane at HP, it’s going to be fun to watch these two companies battle it out. - Paul

Take us to your leader, HP

Well, it looks like the brief Cathie Lesjak era as CEO of Hewlett-Packard will soon come to a close. HP is hosting an analyst day on Tuesday and it’s widely expected that this will also be a coming out party for the new chief. Will it be an internal candidate like Todd Bradley or Ann Livermore? Or will HP shock Wall Street and Silicon Valley by going for an outsider the way it did when hiring Mark Hurd to replace Carly Fiorina back in 2005? That deal worked out pretty well for HP — well until the whole sordid expense report quasi-sex scandal thing.

Investors are clearly excited about the fact that HP may soon have a new permanent leader. The stock was up over 1.6% Monday (making it the Dow’s best performer) and it has rallied about 11% since hitting a 52-week low in late August.

But let’s take a quick second to give some praise to Lesjak. Investors feared the company would become rudderless after Hurd’s ignominious exit. But in the past few weeks, HP topped arch rival Dell in a bidding war for 3PAR, acquired Fortify and ArcSight and authorized a $10 billion share buyback. If you ask me, Lesjak did more in a month and a half than some CEOs do in a period of years. - Paul

And now Ellison has his sights on Intel? Seriously?


Say what you want about Oracle CEO Larry Ellison. He’s certainly ambitious. He’s been buying up software companies left and right for the last few years in order to transform Oracle from a boring database company to a true rival of SAP, IBM and Microsoft. He likes to sail, fly and do other adventurous things. He barely waited for the door to the HP executive suite in Palo Alto to slam shut on Mark Hurd before scooping him up to become an Oracle co-president (and possible successor?)

But none of that may be as bold as what Ellison proposed at the company’s annual meeting Thursday. According to reports from people attending the meeting, Ellison said, “you’re going to see us buying chip companies.” Of course, he’s talking semiconductors and not Frito-Lay. Larry’s comment was enough to get the tech rumor machine cranking up again. Shares of AMD surged Friday, as did shares of British mobile chip designer ARM Holdings.

ARM has frequently been mentioned as a takeover target for the likes of Apple as well as Intel, which finds itself struggling to make a dent in the handheld gadget world. But despite Ellison’s proclamation, does it really make sense for Oracle to buy a chip firm? The beauty of software is the high-margins. Plus, Intel, despite its problems in mobile, remains the 800-lb. gorilla in chips. Would Oracle really want to buy AMD and hope that Hurd can do his cost-cutting magic to get it into fighting shape to better take on Intel? I just don’t see it.

Then again, stranger things have happened. Few thought Oracle would go out and buy Sun Microsystems. So maybe Ellison’s endgame is to try and take down the entire Wintel market. Like I said, he’s ambitious. - Paul

"Mission Accomplished"


photo: Colin McDonald

Yup, he went there. On today’s Oracle earnings call — notable for being the first featuring Mark Hurd, who was doing HP earnings reports a scant four months ago — Ellison trash-talked SAP but saved his real fightin’ words for those who would question Oracle’s Sun takeover.

"To quote one of our great presidents, ‘Mission accomplished,’" Ellison declared. "We think it’s going to become more profitable over the fiscal year."

We’ll turn it over to Jon Stewart for a reminder of how well the year went after Bush hailed the end of “major combat operations.” We’re pretty sure Oracle won’t have to fend off insurgent bombings, but you never know — Sun engineers can be feisty. -Stacy

M&A MadLibs! Oracle to buy (insert storage name here)

If you believe all the rumors that have popped up in the past few days since Mark Hurd joined Oracle, the software giant is going to embark on another big acquisition spree.

Gossip-happy traders have spun the following yarns. Oracle may want to buy Brocade. And QLogic. And NetApp. Heck, the only rumor I haven’t seen yet is that Oracle will go completely bonkers and put in a bid for EMC, which currently has a market cap of $41.3 billion.

Will Oracle make a storage acquisition? Seems likely. Should it? Probably, especially if it wants to truly compete effectively with IBM and Hurd’s former employer HP. But investors need to be forewarned. Not even Oracle has enough cash to buy up every storage firm out there.

And as HP and Dell have already shown us with 3PAR, valuations are quickly getting out of whack. There is a lot of froth in the stock prices of the storage tech firms right now.

Some stocks now riding high on takeover speculation could come crashing down to Earth if/when Oracle finally chooses which storage company it actually wants to pair up with. -Paul

It’s good to be king

Mark Hurd routinely drew grumbles from HP’s rank-and-file about the size of his compensation package: The same year he sliced HP salaries by 5%, he took home a pay package HP valued at $30.3 million. And I remember being startled when HP hired him with a $2 million signing bonus plus a $2.75 million “relocation allowance.” Three. Million!? Was he going to move all of Ohio with him?, I wondered.

Luckily for Hurd, he’s headed to the tech company that’s most unapologetic about its lavish salaries. Sure, Hurd will be in the #2 spot, but the good news is that at Oracle that pays about the same as his old #1 spot.

Oracle filed two revealing documents today with the SEC. The first is Hurd’s offer letter, which features a $950,000 annual salary and a bonus of up to $10 million. The second was its proxy form detailing executive compensation for last year. Safra Catz, who will share the co-presidency with Hurd, had a package valued at $36.4 million. Charles Phillips, who is clearing out of Oracle to make way for Hurd, banked $30 billion in salary, bonus and options.

Larry, of course, took home the biggest stash. His annual salary is $250,000, but stock options and other pay that pushed his total package to $70.1 million. That should be able to buy a whole lotta happiness. -Stacy