SAN FRANCISCO (Reuters) - Oracle Corp investors cheered the surprise hiring of former Hewlett-Packard Co Chief Executive Mark Hurd on Tuesday, sending the business software company’s stock up sharply after the latest twist in a juicy drama that has captivated Silicon Valley.
Hurd’s talent for driving efficiency and integrating acquisitions will be a welcome addition at Oracle, analysts said, as the company ramps up its push into hardware after its $5.6 billion purchase of Sun Microsystems earlier this year.
Hurd joins Oracle as co-president, replacing Charles Phillips, who resigned.
“There’s clearly a lot of respect for Hurd as an operator,” said Macquarie Research analyst Brad Zelnick. “To bring in that kind of institutional knowledge, particularly in a world where there is more competition between Oracle and HP, and also IBM, the market clearly likes it.”
Oracle, the world’s third-largest software maker, is an important partner of HP, as well as a rival. Oracle now competes with HP in the server market, following Oracle’s purchase of Sun, which closed in January.
“It really adds to their bench, and they really did need someone who understands hardware,” said Kim Caughey, senior analyst at Fort Pitt Capital Group. “Hurd is a numbers guy, results-oriented, very focused on cutting costs. That fits in well with Oracle.”
Hurd’s speedy transition to a new employer may not run smoothly, however. HP sued Hurd over his move to Oracle on Tuesday, claiming that it put HP’s trade secrets at risk. His separation from HP did not include a non-compete provision, which are generally unenforceable in California, but it did include a two-year confidentially agreement.
Oracle CEO Larry Ellison, a close friend of Hurd’s, was his most vocal supporter following Hurd’s shocking ouster from HP. Ellison slammed HP’s decision and called the actions of its board “cowardly.”
Hurd resigned from HP on August 6. HP said he had filed inaccurate expense reports related to Jodie Fisher, a marketing contractor who worked for Hurd’s office from 2007 through 2009. Although Fisher leveled allegations of sexual harassment at Hurd, HP found no harassment had occurred.
Hurd joined HP in 2005 and was credited with reviving the company, slashing costs and diversifying the technology giant through a string of high-profile acquisitions.
Analysts said Hurd’s hardware experience will be particularly valuable to Oracle as it continues to integrate Sun.
Analysts said despite the drama around Hurd’s former employer, Oracle’s main rival continues to be International Business Machines Corp.
“I believe Oracle’s strategy of combining software with hardware will enable Oracle to beat IBM in both enterprise servers and storage,” Hurd said in a press release on Monday.
At Oracle, Hurd will oversee sales, marketing and support — similar to the position that Phillips previously occupied. Co-President Safra Catz will remain in her role.
Oracle shares rose as much as 7.7 percent on Nasdaq on Tuesday; in late Nasdaq trading, they were $1.26 or 5.5 percent higher at $24.18. Goldman Sachs added the company to its “conviction buy” list — its strongest stock recommendations — on the news of Hurd’s hiring.
HP shares fell about 41 cents or 1.0 percent Tuesday to $39.93 and are down around 13 percent since Hurd’s resignation. Analysts said the company’s shareholders knew that Hurd could end up working for one of HP’s rivals.
Hurd received job overtures from private equity firms and publicly traded companies almost immediately after his departure from HP, a source told Reuters last month.
“HP made the decision, and they knew one of the risks was they could lose him to a competitor,” said Morningstar analyst Michael Holt.
But Holt said Hurd’s move to Oracle does not make the software company any more of a rival to HP than it was before.
“Once Oracle decided to move into hardware they became rivals, as well as partners, and that dynamic still exists,” he said.
Reporting by Gabriel Madway; additional reporting by Yinka Adegoke; Editing by Lisa Von Ahn and Gerald E. McCormick