Oracle Should Pay $3 Billion to HP, Jury Says -- WSJ

By Don Clark 

A jury in Silicon Valley on Thursday delivered a resounding victory to Hewlett Packard Enterprise Co., finding that Oracle Corp. should pay the computer maker $3 billion in damages -- the full amount it sought -- for actions that contributed to the decline of a once-lucrative line of high-end computers.

The jury sided with HP Enterprise's contention that Oracle violated a contract between the companies when it decided in 2011 to stop creating new versions of its database and other software for systems running Intel Corp.'s Itanium chip, a different and less successful technology branch of that company's popular line of microprocessors.

HP Enterprise, which makes server systems and other data-center hardware, was created last fall from the breakup of Hewlett-Packard Co. HP had argued in a suit in Santa Clara County Superior Court that Oracle's moves violated terms of a settlement associated with its hiring of former HP CEO Mark Hurd. It argued that Oracle, which had expanded into servers by buying Sun Microsystems Inc., had set out to hurt its new rival by the move.

"Oracle's decision to stop future software development on the Itanium server platform in March of 2011 was a clear breach of contract that caused serious damage to HP and our customers," said John Schultz, HP Enterprise's executive vice president, general counsel and corporate secretary.

Oracle denied wrongdoing. Larry Ellison, its chairman, testified that the company took action because Intel had decided to stop supporting Itanium -- an assertion Intel has denied.

Steve Koenig, an analyst at Wedbush Securities who tracks Oracle, called the $3 billion damage award "eye-opening." But he expressed doubts it would greatly alarm Oracle stockholders, given the software company's market value of nearly $170 billion and the chances that payments to HP Enterprise could be reduced as a result of appeals, or at least delayed.

"It's not something that's going to destroy a large part of shareholder value," Mr. Koenig said.

Oracle previously resumed developing software for Itanium after an earlier ruling in the case. It vowed to appeal the jury decision.

"Five years ago, Oracle made a software development announcement which accurately reflected the future of the Itanium microprocessor," said Dorian Daley, its executive vice president, general counsel and secretary. "Two trials have now demonstrated clearly that the Itanium chip was nearing end of life, HP knew it, and was actively hiding that fact from its customers."

The verdict, capping a trial that began in late May, marks a second high-profile courtroom loss for Oracle. A jury on May 26 found Alphabet Inc. unit Google's use of Oracle's Java software didn't violate copyright law, a ruling Oracle also vowed to appeal.

Write to Don Clark at [e-mail]

(END) Dow Jones Newswires

July 01, 2016 02:48 ET (06:48 GMT)

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