* Shares up more than 5 percent after announcement
* Analysts say Hurd at Oracle could be good fit
* Hewlett-Packard sues Hurd
By Gabriel Madway
SAN FRANCISCO, Sept 7 Oracle Corp ORCL.O
investors cheered the surprise hiring of former Hewlett-Packard
Co (HPQ.N) Chief Executive Mark Hurd on Tuesday, sending the
business software company's stock up sharply after the latest
twist in a juicy drama that has captivated Silicon Valley.
Hurd's talent for driving efficiency and integrating
acquisitions will be a welcome addition at Oracle, analysts
said, as the company ramps up its push into hardware after its
$5.6 billion purchase of Sun Microsystems earlier this year.
Hurd joins Oracle as co-president, replacing Charles
Phillips, who resigned. [ID:nN06144965]
"There's clearly a lot of respect for Hurd as an operator,"
said Macquarie Research analyst Brad Zelnick. "To bring in that
kind of institutional knowledge, particularly in a world where
there is more competition between Oracle and HP, and also IBM,
the market clearly likes it."
Oracle, the world's third-largest software maker, is an
important partner of HP, as well as a rival. Oracle now
competes with HP in the server market, following Oracle's
purchase of Sun, which closed in January.
"It really adds to their bench, and they really did need
someone who understands hardware," said Kim Caughey, senior
analyst at Fort Pitt Capital Group. "Hurd is a numbers guy,
results-oriented, very focused on cutting costs. That fits in
well with Oracle." Reuters Breakingviews D:7263780]
Hurd's speedy transition to a new employer may not run
smoothly, however. HP sued Hurd over his move to Oracle on
Tuesday, claiming that it put HP's trade secrets at risk.
[ID:nN07242144]. His separation from HP did not include a
non-compete provision, which are generally unenforceable in
California, but it did include a two-year confidentially
Oracle CEO Larry Ellison, a close friend of Hurd's, was his
most vocal supporter following Hurd's shocking ouster from HP.
Ellison slammed HP's decision and called the actions of its
board "cowardly." [ID:nLDE67901P]
Hurd resigned from HP on Aug. 6. HP said he had filed
inaccurate expense reports related to Jodie Fisher, a marketing
contractor who worked for Hurd's office from 2007 through 2009.
Although Fisher leveled allegations of sexual harassment at
Hurd, HP found no harassment had occurred.
Hurd joined HP in 2005 and was credited with reviving the
company, slashing costs and diversifying the technology giant
through a string of high-profile acquisitions.
Analysts said Hurd's hardware experience will be
particularly valuable to Oracle as it continues to integrate
Analysts said despite the drama around Hurd's former
employer, Oracle's main rival continues to be International
Business Machines Corp (IBM.N).
"I believe Oracle's strategy of combining software with
hardware will enable Oracle to beat IBM in both enterprise
servers and storage," Hurd said in a press release on Monday.
At Oracle, Hurd will oversee sales, marketing and support
-- similar to the position that Phillips previously occupied.
Co-President Safra Catz will remain in her role.
Oracle shares rose as much as 7.7 percent on Nasdaq on
Tuesday; in late Nasdaq trading, they were $1.26 or 5.5 percent
higher at $24.18. Goldman Sachs added the company to its
"conviction buy" list -- its strongest stock recommendations --
on the news of Hurd's hiring.
HP shares fell about 41 cents or 1.0 percent Tuesday to
$39.93 and are down around 13 percent since Hurd's resignation.
Analysts said the company's shareholders knew that Hurd could
end up working for one of HP's rivals.
Hurd received job overtures from private equity firms and
publicly traded companies almost immediately after his
departure from HP, a source told Reuters last month.
"HP made the decision, and they knew one of the risks was
they could lose him to a competitor," said Morningstar analyst
But Holt said Hurd's move to Oracle does not make the
software company any more of a rival to HP than it was before.
"Once Oracle decided to move into hardware they became
rivals, as well as partners, and that dynamic still exists," he
(Reporting by Gabriel Madway; additional reporting by Yinka
Adegoke; Editing by Lisa Von Ahn and Gerald E. McCormick)