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Can This Tech Giant Do Anything Right?

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Whatever Hewlett-Packard (NYSE: HPQ  ) does these days, controversy isn't far away. The world's largest computer systems builder poked a big stick at two hornets' nests in the past few days.

The company continues to accuse Oracle (Nasdaq: ORCL  ) of anticompetitive behavior as it encourages European antitrust authorities to examine the database giant's business practices. HP claims that Oracle is using its software-side muscle to force HP out of the server hardware business. The complaints center on Oracle's decision to stop supporting Intel (Nasdaq: INTC  ) Itanium chips in upcoming releases of its flagship database products. HP co-developed the chip line and remains pretty much the only customer for Itanium chips, so it's easy to accuse Oracle of boosting its Sun systems sales by shutting out an important competitor.

In a recent court filing, Oracle took some pop-culture swings at HP's Itanium strategy: "Intel's independent business judgment would have killed off Itanium years ago. But HP has secretly contracted with Intel to keep churning out Itaniums so that HP can maintain the appearance that a dead microprocessor is still alive. The whole thing is a remake of Weekend at Bernie's."

You don't often see that kind of language in bone-dry legal filings. Some of Oracle's lawyers are clearly enjoying this case. I am not a lawyer, but I can't imagine legal pros being this glib in anything but a slam-dunk, open-and-shut case. Don't expect HP's complaints to gain much traction. In fact, HP seems to be giving up, offering to move Itanium customers to Xeon-powered servers running Microsoft (Nasdaq: MSFT  ) Windows or Red Hat (NYSE: RHT  ) Linux rather than HP's own HP-UX Unix software.

In related HP news, networking titan Cisco Systems (Nasdaq: CSCO  ) is getting tired of HP suing ex-Hewlett employees seeking employment at Cisco. One HP engineer left his post to seek greener pastures at Cisco, only to have an "emergency lawsuit" filed to keep him from taking the opportunity. And that's just one example of a disturbingly common trend, according to Cisco. "Trade secrets are protected by intellectual property laws, not by non-compete agreements and vague theories that a new job would 'inevitably' cause an employee to use trade secrets of his or her former employer," says Cisco's top lawyer Mark Chandler. I couldn't agree more.

Everything HP touches doesn't exactly turn into poison and mud, but a series of questionable board-level decisions has left the company often looking silly. Short of a total overhaul of the board and concomitant executive refresh, I don't see the once-mighty tech titan ever returning to its former glory. I've got skin it this game thanks to a big red thumb in Hewlett-Packard in our CAPS system. Follow HP and the rest of my CAPScalls right here.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Microsoft, Cisco Systems, Intel, and Oracle. The Fool has also bought calls on Intel and created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Cisco, Microsoft, and Intel. Furthermore, we have recommended creating bull call spread positions in Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

Read/Post Comments (2) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 29, 2011, at 3:55 AM, BradReeseCom wrote:

    Hi Anders,

    As far as Cisco General Counsel - Mark Chandler's blog post regarding HP, I received the following email message:

    "Hi Brad,

    "Forgive me for writing anonymously, but I work in the networking industry, and don't want my employer's name to get dragged into this, since I'm a lowly engineer who is not authorized to speak on behalf of my employer.

    "This recent blog post by Cisco's 'head shyster' (General Counsel) Mark Chandler, in which he calls out HP for suing ex-HP-employees for leaving HP and joining Cisco, strikes me as the peak of hypocrisy, because Cisco has done all sorts of stuff to discourage their current employees from leaving Cisco and going to competitors. In the case of my employer, Cisco hasn't gone to the point of sicking the lawyers on us, but they've certainly implied it.

    "Would be interesting to try to nail down Chandler to commit to NOT suing his current employees, or threatening prospective future employers, even if they are competitors."


    Am surprised that Cisco's General Counsel - Mark Chandler is NOT embarrassed by the following video that shows the May 20, 2010 humiliating arrest of Cisco SMARTnet antitrust litigation plaintiff - Peter Alfred-Adekeye (a former Cisco employee), CEO of Multiven, Inc:


    Brad Reese

  • Report this Comment On November 29, 2011, at 11:15 AM, tpir34 wrote:

    I don't get the title of this article. HP is trying to enforce alleged legal commitments from Oracle and enforce a non compete agreement. Whether they are successful or not, it makes good business sense to do it.

    Just because Oracle and Cisco openly criticize HP doesn't mean HP is in the wrong.

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