Oracle Wants Hurd for All the Wrong Reasons

Hewlett-Packard (NYSE: HPQ  ) castoff Mark Hurd is joining Oracle (Nasdaq: ORCL  ) as co-president. I think it's a terrible move for Oracle.

I can certainly see a few reasons why Oracle CEO Larry Ellison wants to bring his good friend on board:

  • Hurd knows how to cut costs, which could come in handy for a company with an expensive habit of growth by acquisition.
  • The man Hurd replaces, longtime President Charles Phillips, was on his way out anyway with a bizarre public relationship of his own in the rearview mirror. This is a neat way to close that book.
  • Did I mention that Hurd and Ellison are buddies? If you're a billionaire CEO with more strings to pull than Gepetto himself, you wouldn't let your merely multi-millionaire tennis pal walk to the unemployment office like any old commoner, now would you?

Excuse me while I get the tongue out of my cheek. If all Ellison really wanted was a brilliant business manager to replace the scandal-tainted Mr. Phillips, Hurd should rank way down on the list of potential replacements. How do you expect to replace one flawed manager with another, equally defective?

So you need a steel-gloved business leader with major league experience and a history of making big-ticket acquisitions work. Guess what? Your own Safra Katz could easily shoulder that task alone, without having to share the job with an outsider. Instead, Hurd's arrival can be seen as a challenge to Katz -- Ellison's sly vote of no confidence. Would you be terribly surprised to see her take a CEO job elsewhere, now that the advancement opportunities at Oracle suddenly look much more murky?

And if you really wanted the best of the best without all of Hurd's baggage, I'm sure Oracle could afford whatever it takes to raid several Silicon Valley firms. Or reach into the famed executive schools at General Electric (NYSE: GE  ) or IBM (NYSE: IBM  ) -- the latter would be a particularly delicious choice when you consider how gleefully Ellison bashes Big Blue in every earnings call and plenty of press releases. None of these choices would draw a cloud of doubt over Ellison's ability to pick managers for their skills over nepotistic tendencies.

Hurd did some good things for HP -- but also showed that he can't be trusted with the coffee fund, let alone billions of dollars attributable to shareholders. This buddy system will fail in spectacular fashion.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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