Well if you couldn’t have seen this one coming a mile away, I don’t know what planet you are living on.
Most of you know that former HP CEO Mark Hurd resigned a few weeks back because of a bit of a corporate scandal involving a certain female contractor and some accounting irregularities. But you know what they say, Ex-CEO’s always land on their feet, and Hurd definitely did that. Oracle, the world’s third-largest software maker, named Hurd co-president and director on Monday.
Almost immediately following this action, which had been rumored for a while, HP filed a civil complaint to block the hiring. Now some of you are asking, why HP didn’t just make it a part of his agreement when he resigned, as you might guess things are never that simple. Silicon Valley is the technology center of the country, and even if HP had try to include what is called a “non-compete provision”, they don’t usually hold up in courts in California. HP did however include a two-year confidentiality pact.
In a civil complaint filed in Superior Court in Santa Clara County on Tuesday, HP said: “In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP’s trade secrets and confidential information to others.”
The trouble here is that HP will have a heck of a time getting a court of law to believe that, and at this point I think HP just wanted to say their peace on the situation. I am positive that Larry Ellison and Oracle looked at Hurd’s separation agreement thoroughly and wouldn’t have hired him unless they knew that the hiring would hold up to just this kind of scrutiny or attack. It’s no accident that Oracle put Hurd in charge of sales, marketing and support at the company, which I am sure they will argue is pretty far away from what he did as CEO of HP.
HP and Oracle are strategic partners and this will no doubt put a damper on that relationship if not completely disintegrate it, but this is business and hiring Hurd is a good business move for Oracle. While HP is a good partner for Oracle, there is no reason that they couldn’t just as easily partner with Dell, who I am sure would be dying to stick it to HP after losing out on 3PAR.
HP asked the court to block Hurd from holding a position with a competitor in which it will be impossible for him to avoid disclosing sensitive information. HP says it paid Hurd “handsomely” with the understanding the he would not divulge sensitive information about the company. Hurd’s exit package from HP is estimated to be in the neighborhood of $34.6 million.
In the end I don’t think that this is a battle that HP can win and if I was them I would focus on properly absorbing and integrating 3PAR into their overall IT stack, which will be no trivial task for them. If somewhere down the line Hurd does break the confidentiality pact and HP can prove it, they can go after him and Oracle then, for now they should probably let this one go.