Oracle's Ellison Calls HP Board Idiots: The Stanley McChrystal Issue

Larry Ellison, the CEO of Oracle (NASDAQ: ORCL), and a founding father of Silicon Valley, took issue with the decision of the Hewlett-Packard (NYSE: HPQ) board to fire chief Mark Hurd. In an e-mail to The New York Times he wrote, “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs  many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

Ellison is friends with Hurd. The Oracle chief claims that the HP board was originally split 6 to 4 in favor of disclosing the sexual harassment problem and later made the decision unanimous. Oddly enough,  the sexual harassment claims turned up nothing. The board may simply have been concerned with the public relations issue HP would have faced if it had kept Hurd as CEO.

The HP board faced a decision not unlike the one that the Obama administration did when General Stanley McChrystal and some of his officers when they made insulting comments about some diplomats and Vice President Biden. Most of the harshest comments were not made by McChrystal himself, but by subordinates.

McChrystal was called to Washington and was fired. The action took place during an extremely tempestuous time in the war in Afghanistan and the decision to force out the general had and still has the chance of disrupting a situation in which a new commander will take months to fully understand and manage the battle in the region. The risk of the replacement was almost certain worse than a modest public relations issue of a senior general speaking indiscreetly.

Hurd has been pushed out at a key time in the history of HP, just as a number of his M&A and cost cutting initiatives are about to bear fruit, or not, depending to a large extent on management skill . The HP board has put a great deal of  the success of those efforts at risk over what may be little more than a perception of misdeeds. Hurd “cheated” on his expense accounts, apparently in an amount of a few thousand of dollars. He paid back the sum. The board, in the judgment of a number of experts, made a mountain out of a mole hill, and it is likely to cost investors substantially.

Douglas A. McIntyre