Oracle’s Catz Says Itanium Chip Wasn’t Part of HP Accord

Oracle Corp. (ORCL) Co-President Safra Catz testified that the company’s agreement with Hewlett-Packard Co. didn’t require it to continue making software that was compatible with Intel Corp. (INTC)’s Itanium chip.

Catz today described to a state court judge in San Jose, California, a September 2010 phone conversation with Ann Livermore, who was then a Hewlett-Packard vice president, as they drafted the terms of a settlement agreement over Mark Hurd’s transition from chief executive officer at the world’s largest personal computer maker to co-president at Oracle.

Livermore said Hewlett-Packard wanted Oracle to continue to “port” its software to servers running on Intel’s Itanium chip, Catz testified.

“Absolutely not, this was totally out of place in this agreement,” Catz said she told Livermore in response. “It had nothing to do with what we were doing.”

Oracle lawyer Dan Wall asked Catz how Livermore responded.

“She didn’t push back,” Catz said. “She was like, ‘Ok, I get it.’”

Hewlett-Packard, based in Palo Alto, California, seeks a court order requiring Oracle to continue developing software for its servers that run on Itanium chips and about $500 million in damages, according to a person familiar with the matter.

$4 Billion

Without such an order, Hewlett-Packard estimates it should be awarded more than $4 billion in damages, based on an extrapolation to 2020 that accounts for projected losses, said the person, who didn’t want to be identified because the court document containing the damages request is confidential.

Oracle, based in Redwood City, California, denies Hewlett- Packard’s claims, arguing that the two sentences at issue in the agreement don’t require Oracle to forfeit what software it can develop and what price it can charge.

In the first phase of the trial, which started June 4, Superior Court Judge James Kleinberg must determine whether Oracle is contractually obligated to continue developing software for Hewlett-Packard’s Itanium-based servers. If so, a jury will determine in a second phase whether Oracle broke the contract and what, if any, damages should be awarded.

On cross-examination, Hewlett-Packard’s lawyer, Robert Frank, showed Catz a portion of a Sept. 12, 2010, e-mail from Oracle General Counsel Dorian Daley to lawyers drafting Hurd’s settlement agreement. Under the heading, “Reaffirmation of the Oracle -- HP partnership,” the e-mail refers to a conversation between Catz and Livermore.

‘Mutual Benefit’

“Ms. Catz and Ms. Livermore did not discuss anything more than an agreement to continue to work together as the companies have -- with Oracle porting products to HP’s platform and HP supporting the ported products and the parties engaging in joint marketing opportunities -- for the mutual benefit of customers,” Daley wrote in the e-mail.

Frank asked Catz if Daley “misrepresented” her conversation with Livermore.

“She added to the conversation, so this is not a perfect representation,” Catz told the court. Daley “added things in the dashes,” she said.

Sales of Hewlett-Packard’s Itanium-based Integrity and Superdome servers have declined since Oracle made its March 2011 announcement that it would stop developing software for Itanium, Martin Fink, a senior vice president at Hewlett-Packard, testified last week.

In 2011, revenue for the “business critical systems” group that Fink manages was about $2.5 billion. Sales of Itanium-based machines accounted for about 90 to 95 percent of the group’s revenue before Oracle’s announcement, Fink said. Now, those machines comprise 70 to 75 percent of the group’s revenue, he testified.

The case is Hewlett-Packard Co. (HPQ) v. Oracle Corp., 11- cv-203163, California Superior Court, Santa Clara County (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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