Oracle to pay $3b to HP in chip dispute

SAN FRANCISCO: Oracle Corp. was ordered by a jury to pay $3 billion after finding that billionaire Larry Ellison and his company violated a contract to support software for Hewlett-Packard Co.’s once-promising Itanium chip.

The jury saw the case as clear cut and were swayed by what they saw as efforts by Ellison and former HP Chief Executive Officer Mark Hurd to hurt his previous employer, said juror Kyra Knaver, a student at Loyola Marymount University in Los Angeles. Ellison lured Hurd to Oracle in 2010 shortly after the latter resigned amid an investigation into his relationship with a contractor, Bloomberg reported.

Jurors in state court in San Jose, California, reached the unanimous verdict in under five hours of deliberations on Thursday, concluding that Oracle’s decision to bail out of an agreement to develop software for the Itanium chip hurt HP’s revenue. Oracle said it would appeal the verdict, which is the largest in terms of monetary value in the U.S. this year, according to data compiled by Bloomberg News.

“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,” Hewlett Packard Enterprise Co. said in an e-mailed statement.

The decision is the second trial defeat for Oracle in about a month after the company lost a $9 billion verdict to Google while trying to stake a claim to the search giant’s Android phone business. The $3 billion award, if ultimately paid, would account for 5.4 percent of Oracle’s $56 billion cash on hand, according to data compiled by Bloomberg.

HP has, since the case was filed, separated into two companies, with Hewlett Packard Enterprise taking the business under dispute with Oracle. Hewlett Packard Enterprise, looking to invest in new ways to win customers, has about $9 billion in cash, according to data compiled by Bloomberg. Since it split in November from its sibling company, now HP Inc., Hp Enterprise's shares have jumped about 10.4 percent.