Oracle vs. HP: Is Larry Ellison Nuts or the Tech Wizard of Oz?

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This week Larry Ellison again took a shot across the new HP CEO's bow by accusing him of personally overseeing the theft of Oracle software by former SAP subsidiary TomorrowNow. While the companies were hardly close after Oracle acquired Sun and effectively went into competition with HP, these latest attacks seem increasingly personal. They either showcase infirmity in Oracle's chief executive, a desperate need to distract observers from other things, or a desire to change a critical perception surrounding Oracle. We'll leave the first to Larry's psychiatrist, if he has one, and focus on the other two.


Oracle Distraction


There are several things Oracle really doesn't want people talking about right now. The first is Mark Hurd's relationship with Co-President Safra Catz. Charles Phillips, who preceded Hurd in the Oracle office of the CEO, was largely seen as Safra's aid in most things. He clearly deferred to her, and she had the power in the relationship. In addition, Phillips focused largely on sales and marketing while Catz focused on operations, M&A and financial performance. Hurd doesn't like M&A and has been very vocal about that historically. His skill is cost-cutting, which crosses into Catz's roles strongly. He isn't known to work well with superiors, particularly women, and forced out Patty Dunn, the former non-executive chairman of HP's board.


In addition, given Hurd's history at NCR and HP, Oracle employees can expect a series of so-called "studies" that will conclude that salaries are too high and benefits too rich. Over the next three years, if Hurd repeats his past practices at NCR and HP, he will cut both sharply, driving high-performing and highly paid employees out of the company. This is not something Oracle wants anyone talking about either.


One of the common stories behind the SAP litigation is that SAP was moving to provide services to PeopleSoft customers who didn't want to do business with Oracle after Oracle acquired that company. Safra Catz is often quoted at analyst events as saying that Oracle doesn't care about customer satisfaction because Oracle customers can't move. Whether this quote is true or not, Oracle has become the new Computer Associates for many buyers who are avoiding not only Oracle, but any firm they think the company might buy. This is just one more loose thread that Oracle doesn't want anyone to focus on.


Finally, I'm at an analyst event in Boston this week and the common feeling among analysts here is that Oracle still doesn't have a good strategy for the newly combined Sun/Oracle mix, and it is covering up how bad the Sun side of the company is. Oracle clearly would like to have people focused on something else.

Changing Perceptions by Discrediting HP's Board


Ellison just hired a very expensive CEO in a company that arguably already has two. This has not only created issues with people focusing on the excessive executive salaries, but Hurd comes in as tarnished. However, that " tarnish" is directly related to being fired from HP, and if the folks who made that decision can be seen as incompetent, then much of the related stigma from the firing can be mitigated. These constant attacks make it look like HP's board didn't do due diligence properly in hiring a new CEO. The desired conclusion is that they are not competent in hiring people, they probably weren't competent in firing Hurd.


In addition, Ellison keeps referring to the SAP action as a theft of Oracle software, which sounds almost like HP's new CEO was some kind of criminal mastermind behind a burglary. This sounds far worse than Hurd's downplayed mistakes on some expense reports. While both perceptions are largely artificial, SAP's mistake was far less simple, one that came as a result of Oracle alienating a lot of PeopleSoft customers. Hurd's ethical breach was far more severe.


We live on perceptions, and Oracle is creating one that increasingly makes Hurd and Oracle look like victims of questionable practices by HP and its new CEO. If this sounds like politics, it is very similar. It suggests Oracle may have an advisor with that kind of background calling the shots.


Wrapping Up: Looking Behind the Curtain


There are enough reasons for Oracle to provide distractions and enough political advisors running around to suggest the two things came together and are behind Oracle's latest rants. Oracle doesn't want you to think about the company that much because it has some major issues to work through. In the end, this suggests there are questions we should be asking, but aren't. So, unfortunately, maybe Oracle's strategy is working. Ellison may be the CEO equivalent of the Wizard of Oz.