Jury Says Oracle Should Pay $3 Billion in Damages to Hewlett Packard Enterprise -- Update
June 30 2016 - 9:51PM
Dow Jones News
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 don.clark@wsj.com
(END) Dow Jones Newswires
June 30, 2016 21:36 ET (01:36 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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