Money, power & greed: the war of the servers

Bill Regardie Founder, Regardie's Magazine
Font Size:

A pal of mine, a sports analyst for one of the TV networks, says that every time a star athlete gets involved in a scandal, that’s bad for the player but good for him.

I feel the same way about this Oracle and Hewlett-Packard brawl which, unfortunately for me, seems to be coming to a close. I’m losing a good story to cover.

With the apparent signing of a peace accord this week between the tech monsters, it looks like the end of the War of Egos. While it only lasted about six weeks, it was the best American business story of the summer.

Hopefully, though, H-P’s board, which many consider the worst in the country, will find a way to renew hostilities. The Vegas odds are two-to-one that they do.

In case you were hiking in Iran for the last month or so, H-P fired its CEO, Mark Hurd, over some trumped-up administrative charges. In response, Hurd’s best pal, Oracle CEO Larry Ellison, e-mailed the NY Times, calling it one of the dumbest moves since Apple’s board fired Steve Jobs nearly 20 years ago.

Ellison may have understated it, considering that in his five years atop H-P, Hurd drove the company to record profits, shot its stock up 500% and slashed payroll by 40%.

Then Ellison hired Hurd as president of Oracle, which drove H-P nuts. They sued Hurd, but had little chance to win under California law.

In the Hurd era, H-P sold Oracle some $5 billion worth of servers and hardware annually. But when Oracle hired Hurd and H-P sued, Ellison in effect raised a middle finger to H-P and said: “Screw you guys, I’m taking my new toy and going home.” The toy was his recently acquired server company, Sun Microsystems, a direct competitor to H-P’s servers.


Actually, it’s more complicated that. The two companies share some 140,000 clients, and Oracle needs a lot of H-P’s other hardware besides servers. So last week, even though he’s a bit of a mad man, Ellison called an H-P board member and started negotiating. Sanity was restored in 15 minutes.

Hurd would have to forfeit his rights to 330,000 H-P shares and promise not to reveal certain trade secrets. Which is a lot to give up.

The question, then, is if Oracle made up Hurd’s loss. Ya think?

Then both companies smoked some weed and promised to continued to work together, or until someone runs off with the other’s new super-duper secret server. Which could be any day now.

In spite of a dysfunctional board and a no-name CEO, H-P still picked up three companies for about $5 billion in the last month to fill in some holes in its line up.

But, as my sports analyst pal might see it: Oracle grabbed the 53-year-old MVP, Mark Hurd, which is like the Yankees acquiring Albert Pujols just in time for the next 12 World Series. So when it comes to wagering on H-P or Oracle, guess where the smart money is going?

Bill Regardie was the founder and publisher of Regardie’s Magazine.