Mark Hurd Joins Oracle as President After HP Exit; Charles Phillips Quits‏

Bloomberg

 

Oracle Corp., the world’s second- biggest software company, hired former Hewlett-Packard Co. Chief Executive Officer Mark Hurd as a president and member of the board, reporting to CEO Larry Ellison.

The company also said in a statement that Charles Phillips resigned as president and director. Hurd, who exited HP last month after the company said he violated standards of business conduct, will serve alongside Oracle President Safra Catz.

At HP, Hurd more than tripled profit by cutting costs and expanding beyond the company’s core business of computers and printers. He oversaw an acquisition spree of more than $20 billion, letting the company branch out into services, networking equipment and smartphones. Oracle, which also has bulked up through takeovers, would draw on Hurd’s background blending software and hardware as it expands into server sales.

“It’s a great fit: As Oracle transitions from a software to a hardware company, who better than him?” said Brent Thill, an analyst at UBS AG in San Francisco who recommends buying Oracle shares. “They’re looking for someone who can take the company above $30 billion; he ran a company that was more than $100 billion. He’s got a very big role and is very capable of running the company someday.”

Replacement Candidate?

Hurd brings to Oracle experience running a computer company triple Oracle’s size, a track record of delivering shareholder returns and the ability to one day become CEO should the 66- year-old Ellison step aside, Thill said. The addition of Hurd could also aid Oracle’s acquisition strategy, he said yesterday in a note to clients.

Hurd, 53, exited HP after an investigation of a sexual harassment allegation found inaccurate expense reports filed by Hurd or in his name. While the company determined that Hurd didn’t violate the harassment policy, it found that he concealed a personal relationship with his accuser, Jodie Fisher, a former actress who handled executive events. Hurd and Fisher, 50, settled her complaint out of court.

Prior to HP, Hurd led a turnaround at NCR Corp., where he helped integrate the company’s hardware business with the acquisition of Teradata Corp., a software maker. Ellison cited that experience, along with Hurd’s time at HP, when he named him to the job.

‘Brilliant Job’

“Mark did a brilliant job at HP and I expect he’ll do even better at Oracle,” Ellison said in a statement. “There is no executive in the IT world with more relevant experience than Mark.”

Ellison upbraided HP’s board last month for letting Hurd go, comparing the move to Apple Inc.’s firing of Steve Jobs in the 1980s. In a letter to the New York Times, Ellison said, “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.”

Oracle, based in Redwood City, California, rose 44 cents to $22.92 in Nasdaq Stock Market trading on Sept. 3. The shares have slumped 6.6 percent this year.

At Oracle, Hurd will work for a CEO who has bought more than 60 companies since early 2005, including Sun Microsystems Inc. for $7.3 billion this year, pushing the software maker into the market for servers -- machines that run websites and corporate networks.

Contending With Catz?

Hurd would be a CEO contender alongside Catz, 48, who was credited by Ellison for the company’s 18-month takeover of PeopleSoft Inc., which transformed Oracle into the second- biggest maker of business-management software. “If I dropped dead tomorrow, Safra Catz would be the CEO of Oracle,” Ellison said at a September 2005 conference in San Francisco. “She is clearly our chief operating officer.”

Phillips “expressed his desire to transition out of the company” in December, Ellison said in yesterday’s statement. He said he asked Phillips to stay on through the integration of Sun.

Phillips, 51, joined Oracle in 2003 from Morgan Stanley, where he was a software analyst, and became co-president in January 2004. A former captain in the U.S. Marine Corps, Phillips was appointed last year to President Barack Obama’s Economic Recovery Advisory Board, a panel of advisers asked to propose solutions to the economic crisis.

“Charles has evolved our field culture toward a more customer-centric organization and improved our top line consistency through a period of tremendous change and growth,” Ellison said.

Extramarital Affair

Phillips said in January that he had a “serious relationship” with a woman who was not his wife for 8 1/2 years, through the middle of 2009, and that the affair had since ended. The statement came after billboards in New York carried images of Phillips and the woman, YaVaughnie Wilkins.

Analysts project that Oracle will reach sales of $34.1 billion in the fiscal year ending in May, according to a Bloomberg survey. It ranks second to Microsoft Corp. among companies whose main business is software. Hewlett-Packard, the biggest technology company by revenue, is expected to top $125 billion this year, analysts estimate.

In addition to taking on Phillips’s sales and marketing responsibilities, Hurd will manage Oracle’s customer support, said Oracle spokeswoman Deborah Hellinger.

Hurd will be “doing everything Charles did, plus customer support,” Thill said. “He’s very capable of taking this company further, probably faster than Charles could have.”

Oracle's Ellison Says Ouster of Hurd Like Apple Firing Jobs

Bloomberg

Oracle Corp. Chief Executive Officer Larry Ellison said Hewlett-Packard Co.’s board was wrong to force the resignation of CEO Mark Hurd, comparing the move to the firing of Steve Jobs in the 1980s.

In a letter to the New York Times, Ellison said, “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.”

Hurd left HP last week after a contractor named Jodie Fisher, who helped organize executive events, made a claim of sexual harassment against him. While the board determined that he didn’t violate the harassment policy, it found that he made inaccurate expense reports and concealed a personal relationship with Fisher, a former actress and reality TV contestant.

“In losing Mark Hurd, the HP board failed to act in the best interest of HP’s employees, shareholders, customers and partners,” Ellison, a friend of Hurd, said in the letter. “The HP board admits that it fully investigated the sexual harassment claims against Mark and found them to be utterly false.”

According to Ellison, the board was split 6-to-4 over whether to disclose the sexual-harassment claim. The directors later decided to make the decision unanimous, Ellison said.

Mylene Mangalindan, a spokeswoman for Palo Alto, California-based Hewlett-Packard, said the board was unified in seeking Hurd’s resignation for violations of HP’s business- conduct standards.

‘Only Vote’

“As the company stated previously, the board voted unanimously for Mr. Hurd’s resignation,” she said. “And that was the only vote the board took on this issue.”

Karen Tillman, a spokeswoman for Redwood City, California- based Oracle, didn’t immediately respond to a request for a copy of Ellison’s letter.

“Unless he’s a member of this board of directors and has a track record where it counts, his opinion should be taken with a grain of salt,” said HP investor Michael Cuggino, president of Permanent Portfolio Funds, which owned 713,000 shares of HP as of last week. “We are monitoring developments and continue to determine whether HP stock is worthy of us holding it in the long term.”

HP, the world’s largest personal-computer maker, said Hurd submitted expense reports that hid his relationship with Fisher. The expenses, which ranged between $1,000 and $20,000, were for meals and travel, and Hurd intends to pay back the total, according to a person familiar with the matter.

No Affair

Fisher didn’t have “an affair or intimate sexual relationship” with Hurd, she said in a statement released by her lawyer, Gloria Allred.

Allred described Fisher as “a single mom focused on raising her young son. She has a degree in political science from Texas Tech and was recently the vice president of a commercial real estate company.”

Fisher worked on the House Select Committee on Narcotics Abuse and Control, Allred said. Fisher also has appeared as an actress in such films as 1992’s “Intimate Obsession,” “Body of Influence 2” and “Sheer Passion,” according to her Internet Movie Database page, which lists her age as 50.

Cathie Lesjak, HP’s chief financial officer, took over as interim CEO last week while the Palo Alto, California-based company seeks a new leader.

Apple Inc. fired Jobs in 1985 after he clashed with CEO John Sculley. He returned to the company 12 years later to lead a comeback, building it into the most valuable technology business in the world.

“That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them,” Ellison wrote.

HP Drops as Hurd Quits, Leaving Lesjak Slowing Growth

Bloomberg

Cathie Lesjak, who took over Hewlett- Packard Co. temporarily after Mark Hurd quit last week, inherited a growth slowdown and a senior staff who may be distracted by jockeying for the top job.

Lesjak addressed reporters and analysts twice in her three days as interim chief executive, seeking to play down concerns about the shakeup. Hurd resigned after a probe found inaccurate expense reports and a personal relationship with a contractor named Jodie Fisher, who is a former actress and reality TV contestant. The stock fell more than 9 percent on Aug. 6 after the announcement.

Going into what has been HP’s biggest quarter, the computer maker forecast sales of $32.5 billion to $32.7 billion. That would be up about 6 percent from a year earlier, a slower rate than the past three quarters. The CEO search makes running the operations more complicated. Several outsiders will be considered for the CEO post, along with executive vice presidents Todd Bradley, Dave Donatelli, Ann Livermore and Vyomesh Joshi, said Abhey Lamba, an analyst at ISI Group.

“If one of them gets the job, what are the chances the other three stay on? That is the question HP has to deal with,” Lamba said. The New York-based analyst recommends buying the shares, which he doesn’t own himself.

Out of the Running

Lesjak, 51, took herself out of the running for the permanent post. The company’s goal is to find the best candidate for the job, she said.

Hurd’s replacement will have to follow through on his five- year run of dominating the personal-computer market and expanding into new areas. Under his guidance, Palo Alto, California-based HP unseated Dell Inc. in PCs and undertook more than $20 billion in acquisitions, pushing deeper into computer services, networking equipment and smartphones.

Candidates from outside HP include Steve Mills, who has run the software group at International Business Machines Corp. for a decade and recently took over the hardware division, and former Oracle Corp. executive Ray Lane, who’s now a managing partner at Kleiner Perkins Caufield & Byers, according to analysts and recruiters.

Hewlett-Packard dropped 5 cents to $46.30 in regular New York Stock Exchange on Aug. 6. The shares have dropped 10 percent this year.

In May, Hurd reported quarterly sales that were about $1 billion more than analysts estimated. Revenue growth accelerated to 13 percent from the year earlier as the company shook off the recession. In the preliminary report for last quarter, which HP will release officially on Aug. 19, the company pegged sales growth at 11 percent.

Lower Forecast?

Its forecast for the current quarter suggests that management is being more conservative, possibly because of the CEO change, Lamba said.

The company investigated Hurd after receiving a letter from Fisher’s lawyer on June 29. Hurd turned the letter over to HP General Counsel Michael Holston within roughly a half-hour, according to a person familiar with the situation.

While the company determined that he didn’t harass Fisher, it found that she received numerous inappropriate payments from HP during her two years as a marketing contractor. Hurd and Fisher settled the case out of court, according to her lawyer, Gloria Allred.

The woman’s job was to organize forums for CEOs and chief information officers that gave customers access to Hurd and other HP executives. She would gather background information on invitees and introduce executives to one another.

Acting Career

Fisher didn’t have “an affair or intimate sexual relationship” with Hurd, she said in a statement released by her lawyer. Allred described Fisher as “a single mom focused on raising her young son. She has a degree in political science from Texas Tech and was recently the vice president of a commercial real estate company.”

Fisher worked on the House Select Committee on Narcotics Abuse and Control, Allred said. Fisher also has appeared as an actress in such films as 1992’s “Intimate Obsession,” “Body of Influence 2” and “Sheer Passion,” according to her Internet Movie Database page, which lists her age as 50.

HP said Hurd submitted inaccurate expense reports that concealed his personal relationship with Fisher. The expenses, which range between $1,000 and $20,000, were for meals and travel, and Hurd intends to pay back the amount, according to a person familiar with the matter.

Ethical Guidelines

The investigation was led by Holston, along with outside counsel, under the supervision of the board, according to a person with knowledge of the situation.

The board’s nominating and governance committee, which consists of board members Lawrence Babbio, Sari Baldauf, Lucille S. Salhany and G. Kennedy Thompson, is responsible for enforcing HP’s standards of business conduct, a set of ethical guidelines for employees that HP said Hurd violated.

In a conference call yesterday, Lesjak said Hurd’s resignation won’t affect customer relationships and that the depth of the company’s management is the best in its history. HP’s success over the past five years has been a team effort, not just Hurd’s doing, she said.

“There’s no question he did a very good job,” Lesjak said. “But he doesn’t do everything. He was one person.”

HP CEO Mark Hurd Forced to Resign Amid Scandal

cNet

Mark Hurd's resignation from Hewlett-Packard in the wake of a sexual-harassment and expense-reporting scandal is a major blow to the well-regarded executive, but especially to the company he leaves behind.

The good news is that Hurd is out just five years after helping HP recover from the most turbulent period in its history and pushing the company to the top of tech world. He leaves Hewlett-Packard in a strong position, and in much better shape than he found it. HP brought in $30 billion in revenue during the second fiscal quarter of 2010, compared with the almost $22 billion of the same quarter five years earlier.

So where does HP go from here? Well, beyond the task of finding a new chairman and CEO, it's likely to be business as usual. Investors were clearly startled, sending the company's stock down 10 percent to $41.84 at the close of trading Friday. But in terms of HP's direction, the consensus emerging in the industry in the aftermath of the news is that there shouldn't be any immediate negative effects--at least operationally--as a result of Hurd's departure, which is an indication of his strengths as CEO.

"The good news is there probably aren't any (major changes ahead) because he's gotten this company working really well," said Gartner analyst Martin Reynolds.

Hurd had the company busily generating profits for investors. In the five years he was at the helm, HP had added $45 billion to its stock market value, to reach $108 billion.

And with a company making money and regarded as operating efficiently, there isn't much expectation for drastic changes ahead.

HP's interim CEO, Cathie Lesjak, the voice investors hear announcing the company's earnings every quarter, has been with HP for almost a quarter of a century. Though she doesn't plan to keep the CEO title permanently, she took pains to try to soothe investors Friday, saying she's "never been more confident in the company's future."

"There is no impetus at all for us to change the strategy," Lesjak told investors during a conference call. "Mark was a strong leader, but at the end of the day, he didn't drive our initiative. The company drove that."

She added that Hurd's departure shouldn't change much about the day-to-day activities of HP's more than 300,000 employees, and those in leadership positions.

"There's no confusion," Lesjak said. "This is a huge company. The top leaders of our businesses have needed to know how to drive their own businesses."

HP employees who have been around for a while are no stranger to scandal and uproar in the executive suite. Hurd's arrival came on the heels of the rather chaotic tenure of former CEO (and current U.S. Senate candidate) Carly Fiorina. Hurd's buttoned-up manner and strict adherence to slashing costs settled the company, and he was able to provide much-needed stability during the embarrassing revelation that former chairwoman Patricia Dunn had overseen a program to spy on reporters covering HP in 2006.

Perhaps because of those qualities, employees were caught off-guard by Friday's revelations.

Hurd was perceived as a stand-up, "clean" guy, a current HP employee who has been around since Fiorina's time, told CNET Friday. That worker, who asked not to be named, said employees were "completely shocked" and "let down" by the allegations against Hurd, as well as his departure, particularly because Hurd was perceived by employees as pushing the company's ethical business practices and the Standards of Business Conduct policy he was found to be in violation of.

Moving on
 

Hurd was known for financial discipline and being a very detail-oriented manager. But just because he had the company running well doesn't mean there isn't room for improvement when the company picks someone new to take the helm.

For one thing, his commitment to cutting costs didn't leave much room for innovation, noted Gartner analyst Martin Reynolds.

"He was very focused on cost cutting and cost management. The challenge of that is it's very difficult to present innovation in that environment," he said in an interview. "The new leader could shift the emphasis from cost focus to move them toward the inspirational things that HP can help companies and consumers do."

Plus, HP has plenty of competition in all areas of its business. IBM, HP's biggest rival in enterprise services, isn't going anywhere, and it spends "far more than HP in research and development," Technology Business Research analyst Ezra Gotthiel wrote in a research note Friday. And though HP still ships the most computers in the world every quarter, the company has to continue to keep an eye on the surging Acer, and others like Samsung and Asus that are making plays for HP's territory of consumer laptops and other portable gadgets.

And, of course, it must keep watching out for Apple. The iPhone and iPad have established Apple as a serious force in personal technology, in terms of design and consumer appeal, and in terms of the company's ability to maximize profits. It became clear earlier this year that HP was taking some cues from Steve Jobs and Apple when it acquired Palm, almost solely so it could own and develop further the WebOS operating system for its devices, the way Apple owns iOS, and unlike Android or Windows Phone.

Gartner's Reynolds suggested HP might even look toward a new leader with a more Jobsian taste for the dramatic, more of an evangelist for the company.

"Obviously they want someone who can make sure the operations stay on track," he said. "There's room for a little bit of flair, a little bit of Steve Jobs in the person. Though not too much. But there is the opportunity to bring in someone with more of a public persona to drive interest in the company.

"But you couldn't do that if they weren't in such a good position."