HP worried about an Oracle takeover after Hurd switched sides

IDG News Service - Hewlett-Packard voiced concerns about Oracle attempting a hostile takeover after it hired former HP CEO Mark Hurd as co-president, Oracle's lead counsel told a judge on Monday.

HP sued Hurd shortly after he went to Oracle in September 2010, and the two companies quickly tried to settle the dispute. One of HP's core demands was a "standstill" agreement blocking takeover bids by Oracle for a period of time, said Dorian Daley, Oracle's senior vice president, general counsel and secretary, a key player in the negotiations with HP. But Daley dismissed HP's worries.

"I said, 'Are you kidding me?'" Daley said during questioning by Oracle in front of Judge James Kleinberg in Santa Clara County Superior Court in San Jose, California. "It was a very surprising ask, from my perspective," because HP is three times as big as Oracle, Daley said.

The so-called Hurd Agreement that the companies reached within weeks of HP's lawsuit is at the heart of the case they are now arguing. In March 2011, a few months after that deal, Oracle announced it would stop porting its software to HP's Itanium server platform.

HP is suing its former partner for alleged breach of contract, saying the Hurd Agreement requires Oracle to keep offering its database and other software for Itanium. Oracle says it's not bound to do so and that it is dropping Itanium because the platform is dying. The case has unearthed emotional reactions to perceived betrayals on both sides.

In this phase of the trial, scheduled for completion by June 25, Judge Kleinberg is to decide whether there was a contract between the two companies and what its terms might be. If he finds there was, the case can move on to a jury trial over whether Oracle breached that contract.

On Monday, HP rested its case and Oracle called Daley as its first witness. Daley's questioning by both Oracle and HP attorneys focused on the flurry of drafts, emails and phone calls between the companies' lawyers and executives in the days immediately after HP sued Hurd on Sept. 7, 2010.

HP's attorney, Robert Frank, repeatedly objected to questions by Oracle attorney Daniel Wall on the grounds that Wall was improperly trying to get to the intent behind Daley's drafts and emails rather than relying on what she had written. Wall made similar objections as Frank cross-examined Daley.

HP was worried that as an Oracle executive, Hurd would use customer relationships and confidential information against it. The key points that HP's board of directors wanted covered in the agreement over Hurd were the standstill agreement, restrictions on Hurd's activities during his first year or more at Oracle, and Hurd's severance deal with HP, Daley said. HP, which was facing legal action by its shareholders over the rich severance deal for Hurd, wanted to get some of that money back, she said.