Is HP Part of Oracle’s Future?

Today's WSJ asked a prescient question:  "Is HP Part of Oracle's Future?"  On first glance, it wouldn't as most of us have always considered Oracle to be a software company.  Or is it?  Oracle's 2009 purchase of Sun Microsystems put the  company squarely in the hardware business, including workstations and enterprise storage systems, courtesy of Sun's 2005 purchase of Storage Technology.  Oracle theoretically has both the leading database software programs the the hardware to tun them on.  It's a shame they didn't buy Netezza (which went to IBM) when they had the chance.  

Oracle's acquisition of HP would require a deal maker partner and nerves of steel.  Forty-nine percent of HP's businss is printers and PC's, but those businesses can be pre-sold.  The other 51 percent contains enterprise hardware and lower end services.  So how to meld those businesses with Oracle's present businesses?  Given Larry Ellison's prodigious personality, one need not ask how, but when.  He is known to be ruthless when it comes to getting results from his people.

It is problematical whether Meg Whitman will be able to turnaround HP, whose problems were decades in the making, starting Carly FIorina in 1999.  Fiorina rode the stock price down over 50 percent, from the time she became CEO.  Mark Hurd rode the stock back up, only to have Leo Apotheker take it back down.  A lot of round-tripping there, and along with it management and company turmoil.  In the last decade, HP has been milked for earnings.  Mar Hurd was well known in the Valley for grabbing profits at the expense of strategic business investment.  I often was given the recommendation to "Sell HP stock when Hurd rides into the sunset." as it was a clear signal that the company had been milked to death.

If the stock gets cheap enough, Larry Ellison will have plenty of room to move in on HP, and will have many more options with regard to its break up.  He can pick the parts he wants and sell the others, and come out ahead.  A restructuring very similar in nature to what the LBO groups perform.

It will be sad to see one of Silicon Valley's iconic companies disappear. At this point, it's a foregone conclusion, as today's HP has little of the brain power and strong businesses that it had in the past.  When I graduated from Stanford Engineering, HP was the "hot" company.  HP was known for its "test question" interviews, consensus management, benefits including lucrative stock options and free morning coffee and donuts.  That is all long gone.

It may be time to say good-bye.  "Long live the King."