Thursday, 14 October 2010

Dangerous artillery


In modern warfare, heavy artillery can be necessary. It can be fundamental to determine who wins a battle. It can contribute as much as you like to winning.

But heavy artillery will not be the actual means to achieve a decisive victory. Actual victory is achieved when the ground troops (infantry, cavalry, tanks or scouts) do actually keep the battlefield and the enemy is either gone, captured or dead.

The problem with heavy artillery is more in the when and the how to use it.

If you strike too early, its effects on the enemy will probably be quickly fixed and mended before your ground troops can take any advantage of it. If you launch it too late, you may probably not even have the time to do it, as the enemy will have taken your position before you strike.

If you use it without having considered all the effects of it, without the proper intelligence backing your plan, well, you may not hit the necessary targets to wreck the enemy as you should. If you shoot before coordinating appropriately with your ground forces, you may even hit them by the so-called friendly-fire. In this case, you couldn’t do your enemy a bigger favor.

We have recently seen the first serious move from the HP Headquarters after the appointment of the new top executives, Ray Lane and Léo Apotheker. Ray Lane himself sent an open letter to The New York Times in reply to a long range torpedo launched by the latter.

The first heavy artillery blow in the Oracle Wars show.

Well-intentioned backing from the incoming Chairman to his CEO… but was it the right shoot?

We think it might have been launched too quickly. Though it might have given the market a positive sign about “hey guys, despite whatever Larry Ellison might have said or might say in the coming future, we are not dead yet”, the main message was not strong enough (they pleaded “non guilty” more than “innocent” in the TomorrowNow affair) and the speed of it looked to us more like an attempt to cut short the thesis from NYT than a real solid argumentation.

Not only was it sent too fast. It was aimed to the wrong target. If the main blow from NYT (which could be read as Oracle, after the conflict of interest held by the author, as you can see in the previous links above) was targeting Léo Apotheker and the HP Board, we believe that attacking Hurd again was a very poor defense of HP’s new CEO and those who picked him.

As well, the heavy artillery blow was self-weakened from the beginning. From Ray Lane’s letter to NYT, the reader gets the impression that Léo Apotheker will be called as a key witness only after having been appointed CEO at HP. This is not actually true. Léo’s name appears in the list of Oracle’s witnesses dated August 5th, even before Mark Hurd’s scandal exploded.

If Ray Lane is capable of managing well the artillery he’s got as Chairman of the Board, he won’t make the best use of it aiming to past issues (and Mark Hurd is definitely something past for HP) as this won’t restore the confidence from the market peers that HP badly needs to wage its war. If selecting Léo Apotheker was the best option for the HP Board, let Léo prove it. Support him forward, and in the event of failure, remove him. But Mark Hurd has nothing to do with that.

One collateral effect as well from this unfortunate artillery firing could be as well weakening Léo Apotheker, as it probably limits his natural space of maneuver. It’s adding pressure on him, unnecessarily, as he already got all the IT industries eyes on him.

It is a matter of opinion, however, whether Oracle’s lawyers intended or not to actually call Apotheker. It belongs to the sphere of hypothesis that after Ray Lane’s letter to NYT, Oracle’s lawyers will eventually call Apotheker or not. But it is certainly true that Léo Apotheker’s presence at court was a possibility before anybody in the world could have even imagined that Mark Hurd was to leave the HP CEO job.

What did Michael Dell watch on TV in November 1973?


Today we’ve learnt that, after the ongoing Fishergate at HP and all the trailing episodes that keep it up, we have some sort of Intelgate at Dell’s.

Several millionaire fines have been set on Michael Dell and Dell Inc after inappropriate accounting practices from 2001 and 2006. Details published recently.  

AP Photo/Evan Vucci

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One of the funny aspects of the story is that Dell Inc is quoted as having won (!) a judge’s permission to pay $100M to settle accounting fraud claims.

What a victory, we’d say. Who call’s a $100M fine a “win”? The only reasonable explanation we could think of is that Dell Inc feared a much higher cost… derived perhaps from a murkier feeling of guilt?

Another $4M fine to Michael Dell that will allow him to continue as the company CEO. Well, sounds cheap, according to the earnings of other CEOs in the industry. Just recall the recent figures published about HP’s Apotheker, who got about that much just for signing up for his new job, and another $4.6M for moving house to California, or Yahoo’s Carol Bartz, who tops the list of well paid toppers… Oracle’s Ellison being the 6th fortune in the planet…

Adding the fines imposed to Dell Inc, We would compare that to the hypothetical impact had this company not injected the money coming from Intel into the financial statements. Still would probably seem a bargain, we think.

In 1973, Richard Nixon defended his record strongly by declaring to the Washington Post “I’m not a crook” in the arch-famous Watergate affair.

A famous quote indeed, probably still familiar to many Americans, who learnt then that the Top Guy was abusing his resources in a fraudulent manner.

Maybe these days there is another Top Guy that is trying to convince himself that he’s not a crook since he won’t probably convince others. Maybe he should have watched carefully TV in 1973.