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Oracle exec's IMs create stir; shares slide

SAN FRANCISCO (MarketWatch) -- Shares of Oracle Corp. were down Monday on speculation that a veteran executive who blasted the company's hardware business and co-President Mark Hurd in instant messages is on his way out or already has left.

Oracle (ORCL) fell 2.1% to close at $27.12 as analysts delved into the potential fallout from Executive Vice President Keith Block's messages, which were disclosed in the continuing court case with Hewlett-Packard Co. (HPQ) over alleged breach of contract.

The July 28, 2011, exchange of instant messages between Block, who is in charge of North America sales, and human-resources executive Anje Dodson was presented as a trial exhibit, and paints a company management riven with infighting.

Block blasted Hurd, complaining that the former H-P chief now heads Oracle's hardware business "doesn't like to travel … likes to stay in the U.S. and rattle around."

"Lots of noise, not much results," he added of Hurd, adding: "be a f------ global president."

Block also portrayed Oracle's hardware business, which grew following the acquisition of Sun Microsystems as "dead, dead, dead." Block also said: "We bought a dog. ... Mark wants us to sell the dog."

The messages also underscored what analysts have argued is a key dilemma for Oracle in its bid to catch up with rivals in cloud computing.

Cloud computing allows business customers to access applications and information from a network, instead of relying on in-house data centers. Instead of getting boxed into hefty multiyear contracts, customers typically pay a fee based on their number of users.

That's different from the way Oracle traditionally has made money, by licensing its products. The exchange suggests the shift to cloud computing is creating some disruptions within Oracle. The company could not immediately be reached for comment.

Block complained about the company's head of cloud services, saying: "She's stealing revenue from me."

The executive also had a grim comment on Oracle's business in China, saying: "Our China revenue is peanuts."

UBS analyst Brent Thill said the disclosure is weighing on Oracle's stock. "It's a difficult situation for them to be in," he said in an interview. "When you have a very senior executive having very strong opinions, it certainly creates some concern."

JMP Securities analyst Patrick Walravens said "multiple sources suggest Oracle may be undergoing a 'massive' reorganization" in the company's fiscal firth quarter, which may include Block's departure.

Block, he noted, "had the misfortune to have a number of his instant messages disclosed as part of the Hewlett-Packard v. Oracle litigation."

In a note, Nomura analyst Rick Sherlund cited an industry source that said Block left Oracle on Friday.