H.P. Settles Lawsuit Against Hurd

SAN FRANCISCO — A fierce and public feud between Oracle and Hewlett-Packard, two of the world’s largest technology companies, has ended after all of two weeks.

Oracle’s president, Mark Hurd, delivered a keynote address during the 2010 Oracle Open World conference in San Francisco on Monday.

On Monday, the companies announced a settlement to a dispute that centered on Oracle’s hiring of Mark V. Hurd, the former chief executive of H.P., as a president. H.P. sued Mr. Hurd this month, claiming he would violate agreements to protect H.P.’s secrets by taking on such a high-level role at Oracle. The parties declined to reveal details about the settlement but said Mr. Hurd would protect H.P.’s confidential information.

However, in a filing with the Securities and Exchange Commission on Monday, H.P. said it had modified its separation agreement with Mr. Hurd. He effectively waived about half the compensation owed him. Mr. Hurd agreed to give up his rights to the 330,177 performance-based restricted stock units granted to him on Jan. 17, 2008, and to the 15,853 time-based restricted stock units granted on Dec. 11, 2009.

Although most legal analysts said H.P. had had little chance of winning its case, the lawsuit immediately strained the business relationship between the two companies. Oracle and H.P. have a long history of selling technology together. About 40 percent of Oracle’s business software runs on computing systems sold by H.P., and the companies have 140,000 customers in common. After the lawsuit was filed — 19 hours after Oracle hired Mr. Hurd — Lawrence J. Ellison, Oracle’s chief executive, warned that H.P.’s actions threatened to derail the companies’ longstanding partnership.

The companies took pains on Monday to say that the business relationship was again on firm footing. “H.P. and Oracle have been important partners for more than 20 years and are committed to working together to provide exceptional products and service to our customers,” Cathie A. Lesjak, the chief financial officer and interim chief executive at H.P., said in a statement. “We look forward to collaborating with Oracle in the future.”

Mr. Ellison said in his statement, “Oracle and H.P. will continue to build and expand a partnership that has already lasted for over 25 years.”

“The partnership is clearly very important here,” said David M. Hilal, senior managing director at FBR Capital Markets. “It’s undoubtedly an effort to kiss and make up.”

Mr. Hilal said Mr. Hurd would probably be prohibited from making decisions at Oracle that would allow him to use confidential information from H.P., like its acquisition plans. The relationship between the two companies began to fray after Mr. Hurd resigned from H.P. last month.

In an e-mail to The New York Times, Mr. Ellison, a close friend of Mr. Hurd’s, lambasted H.P.’s board for the way it had handled the departure. Mr. Hurd left H.P. after the board investigated his relationship with a marketing contractor and found that her name had been left off expense report items and that Mr. Hurd had violated the company’s code of conduct.

“In losing Mark Hurd, the H.P. board failed to act in the best interest of H.P.’s employees, shareholders, customers and partners,” Mr. Ellison wrote.

This month, Oracle hired Mr. Hurd to succeed Charles E. Phillips Jr. as a president at the company. While the legal matter has been resolved, Oracle and H.P. will continue to have a more tense business relationship than in the past.

Oracle’s acquisition this year of Sun Microsystems thrust it into the computer hardware business, one of H.P.’s strong suits.

At the Oracle Open World customer event here this week, Oracle executives talked at length about their plans to conquer the hardware market. Mr. Ellison, in particular, made an impassioned pitch on Sunday evening, just minutes after Ann M. Livermore, an H.P. executive vice president in charge of enterprise computing, delivered a similar message to the audience.

Oracle executives have voiced their interest in acquiring more hardware companies, and H.P. remains on the prowl, making some recent big-ticket purchases. H.P. has made three major acquisitions since Mr. Hurd left the company: 3Par, a computer storage company, for $2.35 billion; ArcSight, a computer security company, for $1.5 billion; and Stratavia, a privately held database and application automation company, for an undisclosed amount.

H.P. also remains in the hunt for a new chief executive.