Five Reasons Hurd Bet Will Not Pay off at Oracle

Rob Enderle

CRN is running a slideshow on the five reasons Mark Hurd will pay off for Oracle, but because there are two sides to every argument-this is the season for election debates and I don't get to participate in them, and because it is fun to debate stuff like this-I'd like to provide the alternative view. Let's look at the counterpoint and argue that Larry Ellison's bet -- $950,000 base salary plus $10 million bonus-may be the most expensive mistake that Ellison has ever made.


Hurd Is the Ultimate 'Please the Financial Analysts' Executive


First, CRN's position is that Hurd is the ultimate "Show me the Money," results-oriented executive. Hurd did do wonderful financial things at Hewlett-Packard. But to do so, he traded off HP's employee loyalty and its R&D, and put the company at an increasing disadvantage against competitors such as IBM and the joint venture Acadia. He demonstrated the skills of an executive who is good at packaging a company for sale, but did not put the company in a good position for the eventual market recovery. The majority of employees at HP indicated they would leave if given the opportunity, and HP likely would have bled badly during a full recovery as a result. That loss could have crippled the company. Focusing excessively on fiscal performance in order to maximize personal compensation is a company-killer, and Hurd was well on his way to killing HP. I'm sure Oracle doesn't want that same fate.


Hurd Hated M&A


Contrary to the position by CRN, Hurd wasn't an M&A madman. He had the opportunity to purchase VMware and didn't see the value, even though his strategy team pushed hard for that acquisition. The latest acquisition that HP did make, for 3PAR, was crippled due to lack of support from Hurd. The company lost the initial bid and was forced into a bidding war with Dell after Hurd's ouster. It cost HP nearly $1 billion extra for the same property, while providing Dell with $72 million in cash from HP.


To maintain his short-term quarterly results, Hurd consistently refused to buy companies identified by his strategy team and created an environment in which HP couldn't retain employees from acquisitions it did make. Voodoo PC, for instance, was a complete failure. EDS only worked because it was a reverse acquisition. EDS was largely left intact and took on the HP employees rather than the other way around. Hurd wasn't the M&A madman; it was Shane Robison, and he had to fight through Hurd to get the job done.


Hurd Will Assure that Sun Sets at Oracle


Contrary to CRN's position that Hurd will make Sun shine at Oracle, Hurd will more likely cause the Sun to set. At NCR, employees slashed Hurd's tires, they hated him so much and, as mentioned above, Hurd sent employee-satisfaction and loyalty scores to the lowest in HP's history and the lowest in the industry. Sun bled massive numbers of employees both prior to and during the Oracle acquisition process and now needs to be rebuilt. The company is like a body that is still living after being ravaged by a large pack of vampires and needs fresh blood, yet Hurd's skill set is closer to that of another vampire. If he uses the same skills on Sun that he did on HP and NCR, he will not be breathing new life into it. New employees will be hard to attract, given his reputation and the lack of job security his efforts will create, and financial incentives and employee entitlements are likely to be extremely uncompetitive. He will put a stake in Sun, not revive it.


HP Was Channel Strong; Hurd Weakened It


Contrary to CRN's position that Hurd was channel strong, HP's strength in the channel existed before Hurd arrived. The combination and successful merger of Compaq and HP, which was largely completed by Carly Fiorina and Michael Capellas before Hurd took the reins, provided the channel expertise being credited to Hurd. CEOs don't do channel work; that is below them. It is to his credit that he didn't completely break HP's advantage, but the best channel expert in the world was Jim McDonnell, and Hurd drove McDonnell to take a position as SVP at Intermec as head of sales. Hurd drove people like McDonnell out of the company; he didn't bring them in. Fortunately, McDonnell had trained others, and his skill set wasn't lost. Hurd was simply lucky he didn't destroy this capability in HP, but it wasn't for lack of trying.


Hurd Only Brings HP Confidential Information to Oracle


Contrary to CRN's position that Hurd's customer relationships equal Oracle sales gains, Hurd only brings HP's confidential information to that table. Oracle is already better than HP at maintaining customer relationships. All Hurd brings is his unique knowledge of HP customers, something that actually belongs to HP. Hurd is not a relationship person, and the cause of the allegations against him was the need to bring on board a hostess to assist Hurd in wining and dining customers-something that obviously backfired badly. While Hurd could certainly learn a great deal from Ellison about customer relationships, there is little Oracle will learn from him other than what he shouldn't be able to provide legally. That would be knowledge about HP's future strategy, HP accounts at risk, Sun accounts HP was targeting, and successful ongoing HP strategies against IBM. But he has brought controversy, and is likely to bring more. I think it could be argued that Oracle doesn't need any more of that.

Wrapping Up: Hurd Is Bad for Oracle


Hurd clearly personifies an executive who takes credit for things he did not do and feathers his own nest at the expense of employees. He is not the asset that CRN paints him to be. On each point, Hurd either has little or no skill, or his skills run contrary to what Oracle needs. He could be used to help drive down HP's valuation, knowing HP's weaknesses better than most. He could better position Oracle as a potential successful buyer of key parts of that company,and he clearly knows highly confidential weaknesses in HP that Oracle could use to its advantage. But, as an executive, he brings little to the table that Oracle doesn't already have.

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