The Larry, Mark and Safra show at OracleSeptember 7, 2010: 12:52 AM ET
Oracle's hiring of ousted HP CEO Mark Hurd sends two signals: Larry Ellison doesn't plan on calming his executive suite -- and IBM is even more in his sights.
On paper, everything is right about Mark Hurd becoming co-president of Oracle (ORCL). He is the operational yin to CEO Larry Ellison's innovative yang. Once the innovators of Silicon Valley looked down on the business people who knew how to make budgets, manage people and market their brilliant inventions. Now the technical geniuses recognize those other types are needed.
Hurd is the ideal foil to Ellison. He was an accomplished executive even before he took his game up several notches when he moved from smallish NCR (NCR) to megalithic Hewlett-Packard (HPQ). Ellison, meanwhile, is a profoundly insightful technologist who has managed to stay one step ahead of industry changes while famously managing to avoid the nitty-gritty of business operations that don't interest him.
In practice, however, the arrival of the recently departed HP hard-charger will roil an already tumultuous executive suite at Oracle. For the past several years a triumvirate has run Oracle. Ellison has overseen engineering and whatever else he pleases to oversee. Safra Catz, a former investment banker, has run finance, M&A and what traditionally would be called operations. (I profiled Catz last year in Fortune; read "Oracle's enforcer - Safra Catz.") Charles Phillips, a former research analyst, ran sales. Phillips resigned Monday, simultaneous with Hurd's appointment.
Oracle watchers gossiped for years that Catz and Phillips weren't the best of chums. There are two takes on how Hurd and Catz will get along.
Catz is a longtime confidante of Ellison's, an executive skilled in knowing Ellison's needs and keeping her name and face out of the limelight. Hurd is a newer friend of Ellison's, who shares the billionaire's interest in tennis as well as being a fellow guy's guy. Catz and Hurd are financial types, not technologists, though both have decades of technical chops and deep strategic understandings of how the industry works. Catz has a reputation for loathing the hurly burly of dealing with customers and investors, though she has stepped up her role with investors of late. Hurd verily lives to sell stuff and relishes pressing his case with the people who write checks on their companies' behalf. He thinks in terms of relative valuations and loves to talk about it. As of early 2009, Hurd and Catz didn't know each other well; now they've got to get along while being courtiers in the court of Larry.
Of course, there's more than just palace intrigue at play here. The statements on Monday attributed to each of the new triumvirate are worth parsing for what Oracle was willing to say where other companies would have mouthed some pablum. (One of the great things about Oracle, particularly under Ellison's leadership, is its willingness to say and do controversial things. Many executives around the Valley undoubtedly thought Hurd got a raw deal from the HP board. Only Ellison stepped up and said so publicly. Other CEOs -- including Hurd -- refuse to criticize competitors publicly. Ellison taunts his competitors openly, using quarterly earnings calls to bait the likes of SAP (SAP) and IBM (IBM).)
Ellison noted that there is "no executive in the IT world with more relevant experience" than Hurd. The key word there is "relevant." Ellison praised the defining early moment of Hurd's career, his stewardship of NCR subsidiary Teradata, which integrated software and hardware in a way Ellison said is Oracle's future. Oracle shocked the tech world with its purchase of Sun. By hiring Hurd and calling out his hardware background, Ellison is signaling that the hardware push continues.
For her part, Catz said she's looking forward to working with Hurd "for years to come." In other words, she's not going anywhere. She also called out Hurd's experience in "operating a $100 billion business." That's a characteristically bold statement: Oracle's sales are about quarter that size.
Finally, Hurd took a swipe at Oracle's enemy of the moment, and HP's as well: IBM. "I believe Oracle's strategy of combining software with hardware will enable Oracle to beat IBM in both enterprise servers and storage," he said. Oracle has plenty of competitors in servers and storage. It shows its respect for IBM by picking a fight only with Sam Palmisano and Co. Hurd praised Oracle for having "the most innovative team in the IT industry." The folks at Google (GOOG) or Apple (AAPL) might object. Yet Hurd is tacitly acknowledging the rap against HP during his tenure: that HP was good at cost cutting but not innovating.
After having been chairman and CEO of the largest tech company in the world, it's a bit of come-down for Hurd to become co-president of Oracle. Does he have a promise from Ellison that he'll be CEO within a given period of time? Or was it simply too alluring for Hurd to get back to work and ensure that people would change the subject from his ignominious exit from HP? Impossible to say.
What's certain is that the drama will continue to play out in public. In his statement, Hurd referenced Oracle's annual sales shindig, Oracle Open World, where the company will announce "some exciting new systems." The conference begins Sept. 19 with keynotes currently planned by Ellison, Catz and HP executive Ann Livermore. (Awkward!) As a sign of how quickly Hurd's hiring must have come together, the public agenda for the conference still lists Phillips as speaking on day two. This is only one of the many changes to expect Oracle to make in coming weeks.