Daily Archives: September 6, 2010

No Ruse: Hurd Joins Ellison at Oracle

A changing of the guard has occurred in the Oracle executive suite, with Charles Phillips on the way out and Mark Hurd, former chairman and CEO of Hewlett-Packard, taking his place as co-president alongside Safra Catz.

The move is both unsurprising and surprising at the same time. For example, it’s not surprising that Phillips is leaving Oracle. Reports had persisted for some time that he might depart. His departure needn’t have coincided with Hurd’s arrival, but that’s the way it worked out.

Comfortable Arrangement

Speaking of which, Hurd’s move to Oracle makes perfect sense considered within the context of his friendship with Larry Ellison. The two apparently are close, and they share considerable mutual admiration and respect. There’s every reason to think they’ll be able to co-exist at Oracle’s executive heights.

That said, I’m still not sure that Oracle needs Mark Hurd. It’s already a lean, mean ship, and Hurd’s modus operandi is to identify and rectify operational inefficiencies in pursuit of cost reductions. Oracle does that well today, and probably could have continued to do so without Hurd joining the company, no doubt at great expense to shareholders.

From Tennis Court to Boardroom

I have to wonder whether Ellison is making this move purely on the basis of business considerations or whether he made the decision more for personal reasons. It certainly feels like executive fiat. I don’t think Hurd will do any lasting damage at Oracle — he’ll be reporting to Ellison and will not be given the latitude he had, up until near the end, at HP — but nor am I convinced that he offers a lot of upside value.

I had thought Ellison and Oracle might have been engaging in a ploy in leaking discussions of Hurd taking a job there. I thought Ellison might have been trying to help his friend’s negotiating position in relation to a CEO position elsewhere. There had been talk to that effect in recent days.

In the end, though, the tennis tandem have become boardroom buddies. What will be interesting to watch now is not so much how Hurd coexists with Ellison, but how well he gets along with co-president Safra Catz. You know the old saying: Two’s company, three’s a crowd.

Pondering Hurd-to-Oracle Reports

Everybody knows by now that Oracle CEO Larry Ellison and former HP CEO Mark Hurd are good friends, on and off the tennis court.

Ellison, you might recall, sent the New York Times an impassioned email missive decrying the HP board’s decision to show Hurd the door, ostensibly over dubious expense reports. That futile intervention by the Oracle chieftain was testament to his loyalty to his friend and it might actually have reflected Ellison’s true estimation of Hurd as an executive.

We’ll know soon enough, because reports have surfaced in the Wall Street Journal and the aforementioned New York Times suggesting that Oracle might offer a top executive position to Hurd. Other reports also suggest that Hurd could snag a seat on Oracle’s board of directors.

These reports all are fueled by “a person briefed on the talks” between Hurd and Ellison. The person in question has chosen to remain anonymous, apparently due to the confidentiality of the matters under discussion. We don’t know whether the talks are being leaked by somebody inside Oracle, someone close to Hurd, or by other parties with knowledge of the situation.

Like Dropping Anvil on Subdued Prisoner

If Hurd were to join Oracle, it would be in a senior executive capacity, especially if he also were to claim a position on the board. This suggests that one of Oracle’s current co-presidents, Charles Phillips or Safra Catz, could be displaced as a result of Hurd’s ascension. Of the two, Phillips is thought by many to be more likely to suffer if Hurd were to join the Oracle executive team.

Still, if Hurd were to join Oracle, I’d attribute the move to Ellison’s friendship with Hurd rather than to any burning need for Hurd’s talents at Oracle. Hurd would not come cheaply, and — on the basis of a rigorous cost-benefit analysis, surely an approach Hurd would appreciate — it’s not obvious that he’d bring a return on the considerable investment he’d entail.

After all, Oracle doesn’t have difficulty running a tight ship. Why would it have need for the services of an executive who is the technology industry’s answer to Al Dunlap, a man variously honored with affectionate sobriquets such as “Chainsaw Al” and “Rambo in Pinstripes.” Adding Hurd to the mix would be overdoing it, like dropping an anvil on a prisoner who’s already been subdued.

Potential Negotiating Leverage

The fact is, Oracle doesn’t need Hurd’s operational help with the integration of Sun Microsystems, and Larry Ellison doesn’t require or want assistance plotting the strategic course and vision for his company. Besides, Hurd’s strength is not and never was vision. His calling card, his speciality, is finding and then mitigating or eliminating operational inefficiencies. Oracle doesn’t have many of those.

All of which causes me to wonder whether this story has been leaked for other reasons. We know Ellison and Hurd are friendly. We know Ellison is inclined to come to his friend’s assistance. Allow me to hypothesize for a moment. Let’s assume Hurd is in negotiations for a CEO job with another technology company in Silicon Valley, one whose operations might benefit from some vigorous austerity measures. Let’s further suppose that Hurd is trying to negotiate the sort of boffo compensation to which he has become accustomed. Finally, let’s assume that the company in question is reluctant to acquiesce to his demands. In those circumstances, a putative offer of a plum job at Oracle could provide Hurd with convenient negotiating leverage.

No matter what transpires, I would not be surprised to see Hurd take a board seat at Oracle, effectively substituting for the one he lost at News Corporation in the wake of the scandal (or whatever it was) at HP. Ellison and Hurd are friends, after all.