IT Investment Research

HP Fires Apotheker to Block Oracle/Ellison Takeover

When something makes no sense, you have to connect the dots.  That's why it's crystal clear to me that HP's board fired Leo Apotheker on September 22 in order to block -- or delay -- Larry Ellison of Oracle (ORCL) from taking a run at HP (HPQ).

Why else would the HP board hire Leo Apotheker as CEO less than a year ago (at the time the recently fired CEO of SAP, not that that was his fault), probably at a big signing bonus (I just don't feel like looking it up), OK HP's exit from the PC business of which it is the market leader, OK his acquisition of the mishmash of antiquated software called Autonomy (AUTN) to get into a market that is literally disappearing, OK his throwing away the value in the Palm acquisition (the acquisition itself happened before Apotheker's arrival), OK a list of other changes that fundamentally changed the world's largest information technology company (to the point that it would no longer be the largest), and then pay him $25 million in severance?

You might think that it is simply that HP's board is the most incompetent set of business people ever assembled. You might think there is clear and convincing evidence now for a true shareholder class action suit. You might think that the Buffett-types on the HP board wanted to help make President Obama's argument against corporate-jet deductions and millionairre salaries.

But it's simpler than that. I take Ray Lane's word for it, as reported by Eric Savitz, that this is a different board than the one that fired Fiona and Hurd and hired Apotheker. This board is smart.  It knows that Larry wanted to buy HP so that he could fire Leo on the steps of the court house at the next TomorrowNow trial in downtown Oakland. Now he can't.  Bravo!

-- Dennis Byron

SAP: You Still Need to Get Out of Dodge; Maybe HP Will Give You Half

You would probably be surprised to know that yesterday -- September 1, 2011 -- was one of the best days in Oracle (ORCL) CEO Larry Ellison's storied business career.  An Oakland federal court vacated a $1.3 billion award in Oracle's favor and awarded Ellison a mere $300 million instead.  

Now, in return for losing that measly billion dollars, Ellison and Oracle will get $10 billion in additional publicity as the case winds in two directions.  What a return on investment.

• First, Oracle will appeal the feds' decision of the appeal by rival SAP, which admitted wrongdoing in the original suit. The appeals will go up through additional court levels. As I said when this all started four years ago, SAP needed to bury this thing fast. It didn't to its lasting regret. Let's face it, SAP was wrong (wrong for even buying TomorrowNow, never mind the actual criminal behavior). I'm thinking Supreme Court here with Larry standing on the front steps. But eventually Oracle will lose in the appeals process because, let's face it, $1.3 billion was excessive. But at each level, Oracle can turn the PR machine back on.
• Then, Ellison will get to retry the case against SAP. Oracle can turn the PR machine back on again. It can keep pummeling SAP. Oracle can use the SAP retrial as a set up for the lawsuit against RiminiStreet (I assume that's still alive; I took a sabbatical this summer?). And this time, Larry can drive down the hill to Leo's house and drive the HP (HPQ) CEO over to the court house. Leo can't hide this time.

Like I said, in November, SAP, get out of dodge. But first ask HP if it will kick in half of the billion-three fine. HP can't want this to proceed any further either. 

-- Dennis Byron