Oracle refused to commit to continued porting of its software to Hewlett-Packard's Itanium platform as part of the companies' settlement over Oracle's hiring of Mark Hurd, Oracle co-President Safra Catz told a judge on Tuesday.
HP enterprise business head Ann Livermore at one point proposed several business commitments to be included in the settlement agreement when she and Catz spoke in the wake of Hurd's hiring in September 2010, Catz said. Among those was Oracle agreeing to continue porting its software to Itanium, a chip platform that is predominantly used by HP.
"I told her this was totally out of place in this agreement ... and that we were not going to do that, period," Catz told Judge James Kleinberg of the Santa Clara County Superior Court in San Jose, California.
Just days after HP fired Hurd as its CEO, Oracle hired him as co-president. HP promptly sued Hurd to stop him from misusing confidential information.
"I was shocked, actually. I was really, really surprised" when HP filed the suit, Catz said on Tuesday. She saw the filing as a suit against Oracle as well as Hurd.
Almost as soon as the suit was filed, the companies were trying to patch up the rift in their relationship, which represents billions of dollars in revenue and tens of thousands of joint customers. Adding to the urgency, Catz said, was the fact that HP had purchased a keynote address at the upcoming 2010 Oracle OpenWorld conference, to be delivered by Livermore with an introduction by Catz.
By September 20, less than a week before OpenWorld, they had a deal and a press release saying their partnership was sound. But the following March, when Oracle announced it would stop porting its software to Itanium, HP sued again.
A key piece of HP's case is a cover email to one draft of the proposed agreement, written by Oracle general counsel Dorian Daley. In it, Daley said Catz and Livermore had discussed the companies continuing to work together as before Hurd's hiring "with Oracle porting products to HP's platforms and HP supporting the ported products and the parties engaging in joint marketing opportunities."
On Tuesday, Robert Frank, an attorney for HP, grilled Catz over whether that email misrepresented the conversation she had had with Livermore. Catz said Daley had added the reference to continued porting and joint marketing, which was broken out with dashes.
"In general, she represented the conversation," Catz said. "She added things in the dashes. It is what it is."
Catz's account matched Daley's own testimony about the email on Monday. She referred to the porting and marketing as examples of the kinds of things HP and Oracle had done in the past.
The final Hurd Agreement used much more general language, saying Oracle would "continue to offer its product suite on HP platforms ... in a manner consistent with the partnership as it existed prior to Oracle's hiring of Hurd." In the current phase of the case, the companies are arguing before Judge Kleinberg whether that language constitutes a contract that can be breached, as HP argues Oracle has done.
Negotiating the deal was a tense affair, with calls, meetings and email exchanges over several days, including the weekend of Sept. 10. Oracle's attorneys have testified they consistently demanded no new business commitments for the company. When HP circulated one draft that spelled out specific requirements, such as Oracle giving HP terms as good as any hardware supplier, it drew a strong reaction from Catz. That wording was quickly struck from the document.
"I was just furious and fuming and told her the deal was off, and she said she was sorry, and that was it," Catz said.
Catz's testimony on Tuesday also gave new insights into Oracle's business and previous dealings with HP. During cross-examination, Frank challenged Catz's assertion that Itanium was "not an important business at this time because it is such a small environment." He presented an analysis, marked as an Oracle document, that said Oracle's annual revenue from licensing of its database software on Itanium-based HP-UX servers was US$321 million as of 2010.
"There's no way to know that number, sir," Catz said. According to her explanation, Oracle doesn't track software revenue by operating system or hardware platform in its financial system. It would be impossible do so because customers may use more than one type of platform and OS, and modify the mix over time, she said.
"This analysis is completely bogus," Catz said. "It's not related to reality of any sort."
Despite their contentious litigation, HP and Oracle still work together in many areas and their partnership has not changed as a result of the disagreement over Hurd, Catz said. The two companies completed a manufacturing agreement just a week ago, she said.
Meanwhile, Oracle's chief competitors remain IBM, a key rival in the database market with its DB2 platform, SAP, "a vicious competitor" that is still embroiled in a case involving SAP's theft of data from Oracle, and Microsoft, "our classic competitor for many years," Catz said. Oracle and those competitors all maintain software porting arrangements, she said.