Oracle (ORCL) and Salesforce.com (CRM) have both acquired social media marketing companies, recently, in an effort to stay in front of competitors in the ever changing Software-as-a-Service world. But Oracle has a very busy month ahead. It is set to release its year-end earnings report in late June. Earlier this month, CEO Larry Ellison and President Mark Hurd outlined the future operations of Oracle Cloud and Oracle Platinum Services. Ellison and Hurd have spoken on many topics as of late, and I think this may be a preview of a juicier story for Oracle this year.
Besides the future of Oracle Cloud and its earnings report, Oracle's lawyers will be quite busy too, in June 2012. The litigation team is scheduled to appear in two separate court rooms across the United States in June 2012. Oracle will also be in the court room with two fierce competitors in the technology world and the competitors are SAP (SAP) and Hewlett-Packard (HPQ) with regards to the separate claims. More interesting is the witness list that could take the stand in testimony. It is believed the list includes Ellison, Hurd, former Hewlett Packard and SAP AG executive Leo Apotheker, and Hewlett Packard executive Ann Livermore.
Trial with Hewlett Packard begins
This may be the trial that gets interesting, if not for the verdict but for all the commingling of high-level executives at both Hewlett Packard and Oracle. Let's take a look at who is all involved here; sure there is Larry Ellison at Oracle and he is backed by President Mark Hurd, who is a former CEO of Hewlett Packard. On the Hewlett Packard side of the equation is CEO Meg Whitman and former Oracle executive Ray Lane.
The lawsuit brought forth by Hewlett Packard contends that Oracle stopped research, development and producing software that was crucial for Hewlett Packard's top line servers that run on an Intel (INTL) chip named Itanium. Hewlett Packard is seeking an award of $4 billion as well as a court injunction that would force Oracle to continue developing software for Intel's Itanium chip.
The first phase of the trial started on June 4, 2012, in Santa Clara Superior Court of the State of California, and residing over the procedures will be Superior Court Judge James Kleinberg. The phase is believed to last up to three weeks and will decide whether there was a contract in place between Hewlett Packard and Oracle with regards to the research, development and production of the Itanium chip. The second phase of the trial which is to be concluded by July 27, 2012, Oracle will argue that Intel had wanted to end the production of the Itanium which was floundering. Oracle believes Hewlett Packard under took a strategy of trickery with Intel to continue production of Itanium. If the trial enters a second phase it is believed that Intel's CEO Paul Otellini may testify, not as a defendant but as a witness.
Many observers believe the argument started when Hewlett Packard released Mark Hurd, Ellison wrote the New Times and stated that "The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs." Ellison is no stranger to bashing his competition and saw this as an opportunity to call out the Hewlett Packard board of executives.
Hewlett Packard sued Oracle for the hiring of Hurd and eventually the two companies came to an agreement. In this agreement it was believed by Hewlett Packard that Oracle would continue the research, development and production of software for the Itanium chip.
But then to make the situation more contentious with Ellison, Hewlett Packard hired Ray Lane and former SAP AG executive Leo Apotheker as the new CEO at Hewlett Packard. Oracle lashed back at Hewlett Packard claiming that there was no disclosure during the agreement that Lane and Apotheker were to be hired. At this point Oracle and Ellison refused to continue any type of work on the Itanium chip.
The first day of litigation was a barrage of negative statements made by both companies against each other. Oracle claims Hewlett Packard lied to clients and customers about the future funding and production of the Itanium chip. Hewlett Packard argues that Oracle maliciously stopped producing software for the Itanium chip that in turn crippled one of Hewlett Packard's best selling server units.
Oracle is a buy at this price
I believe Oracle would be a good investment right now with the stock accumulating a nice base at $26 per share. Even after the negative court verdict with the Google lawsuit over Java API's, Oracle has found a way to right the ship and pivot into a new trial with a strong presence in court. Oracle is ready for both of these trials. Mr. Ellison will be reminding his litigation unit daily that he likes to win, especially when the game is against SAP AG and Hewlett Packard.
Let's look at the big picture. Sure, Google won in court against Oracle but Oracle also slowed down the development of Android going forward, albeit that it was a minor slowdown. The trial against SAP AG can only help revenue when a final settlement is awarded. But an investor can not forget that SAP AG has had to use a tremendous amount of resources in defending the final damages set forth in the first two verdicts. The dollar figure may not be all the damage that will be done to SAP AG because one can only imagine what Mr. Ellison will have to say in the press. Lastly, the Hewlett Packard trial will be ugly for both sides in the press before it is all over. I believe Oracle has achieved its primary goal against Hewlett Packard by slowing down and shelving one of Hewlett Packard's better performing and selling server lines. Even if Judge Kleinberg rules in Hewlett Packard's favor the case will be appealed by Oracle and Hewlett Packard has no guarantee that Oracle will abide by a court injunction to continue producing software for the Itanium chip.
The knock-out blow has already been thrown by Oracle, and Ellison knows this is the case with both SAP and Hewlett-Packard. Oracle will live on and continue to dominate in its technological prowess. Let's don't forget too, that Oracle will be releasing fiscal year end earnings on June 21, 2012. For the last week, Ellison and Hurd have been fairly vocal in their support of Oracle going forward and for Oracle to continue on a growth trend in the future. I think it is a good idea to buy Oracle right now and see what happens with the earnings report, but the purchase of Oracle may be the juiciest story of the summer that you follow. After all, it would be fun to be a fly on the wall if Ellison, Hurd, Apotheker, and Lane were ever in the same room together.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.