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Saturday, October 1, 2011

HP: Larry Ellison's New Plaything

HP:  Larry Ellison's New Plaything
As reported in the Wall Street Journal, Oracle's Larry Ellison is having his fun with beleaguered HP, like a cat with a ball of yarn. This time over HP's ill-conceived acquisition of UK-based content management vendor Autonomy.

Larry claims Oracle was pitched the Autonomy business by their CEO Mike Lynch and Silicon valley dealmaker Frank Quatrone in April, but rejected  an acquisition because at $6 Billion, it was grossly overvalued. (Ouch! HP is acquiring Autonomy for nearly $12 Billion.)

Mike Lynch steadfastly denied pitching Autonomy to Oracle; Larry says he's lying. Who is telling the truth?

The tit-for-tat between Larry, Mike, and Frank went like this.


I think Larry is. You don't show up at a meeting with Frank Quattrone to talk to Oracle's president Mark Hurd and acquisition's chief Doug Kehring to talk about databases, now do you?

Let's have a look at the timeline. Frank says he sent financials in January, and the two sides met in April, which Oracle confirms. Obviously, this gave Oracle two months to review financials. Sounds like a deal in progress to me.

But why are Mike and Frank so sensitive to the topic? I mean, companies talk about what-if scenarios and synergies  all the time. Well, HP is going through a serious case of buyer's remorse.  And Larry's comments only add fuel to the investor fury for the high price ex-CEO Leo Apotheker paid for Autonomy.

And why the high price? One can only speculate that Oracle had something to do with it by sending a backchannel signal that they were in the deal. Kind of like what the Yankees did to the Red Sox in faking their interest in Carl Crawford so the Sox would have to pay a higher price. Or perhaps Mr. Quattrone let HP know through the grapevine that Oracle was going to move on Autonomy. Either way, the plot thickens...

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