A U.S. jury in California has ordered Oracle Corp. (ORCL) to pay $3 billion to Hewlett-Packard Enterprise Co. for violating a contract that obligated the software company to support the Itanium chip developed by Intel and HP.
An Oracle spokesperson told Reuters the company is planning to appeal the judge’s unanimous verdict issued on Thursday. Regulators stated that Oracle’s decisions of ending support for the chip affected HP’s revenues. Bloomberg analysts said this is the largest verdict of the year.
In 2011, Oracle software stopped supporting HP’s Itanium-based technologies. The company, which was led by the billionaire Larry Ellison at that time, argued that the chip life cycle was coming to the end. Intel had started development of its x86 microprocessor.
HP debated that Oracle had previously agreed to continue offering support for Itanium-based servers. Otherwise, hardware using the chip would become outdated and useless. Santa Clara Superior Court Judge James Kleinberg determined in 2012 that there was a contract in effect.
“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,” HP said in a statement, according to Bloomberg.
Two different views: The judge has taken a decision
John Schultz, executive vice president at HP, said the company is “gratified” by the jury’s decisions. He told Reuters that Oracle’s measures to stop supporting Itanium technologies “was a clear breach of contract.”
Oracle said the company began offering its latest products for Itanium chips, after Kleinberg’s announcement in 2012. Dorian Daley, general counsel at Oracle, said the company will appeal the court’s ruling, now that the trial has concluded.
The company founded by Larry Ellison lost an $8.8 billion lawsuit against Google in May. Oracle would have to pay HP $3 billion in cash, which represents 5.4 percent of the company’s stock, said Bloomberg on Friday.
HP split into two different companies in 2015. Bloomberg analysts estimated that Hewlett-Packard Enterprise has currently $9 million in cash, while HP Inc.’s shares have increased 10.4 percent since the November separation.
‘Oracle never believed it had a contract to continue to port software to Itanium indefinitely’
Oracle argued in June that it would also support Itanium-based servers in future software releases. The company headquartered in Redwood City, California, said it has been introducing updated software for Itanium systems, while Intel and HP “stopped developing them years ago.”
“Oracle never believed it had a contract to continue to port our software to Itanium indefinitely, and we do not believe so today,” Oracle said in a statement issued on Thursday.
On the other hand, Hewlett-Packard Enterprise criticized Oracle’s 2011 actions, saying the damage was irreversible since customers had to replace their technologies. Development of the Itanium chip started in 2001 by the hands of Intel and HP.
Diana Garrett, a retired Intel software manager, told Bloomberg that Oracle’s arguments “did not make sense.” By contrast, Oracle executives said that contractual obligations had to be equal for both companies. According to Daley, HP “breached its own obligations”.
Source: Bloomberg