New HP CEO Apotheker Shows Up During Earnings Call in Palo Alto
While Oracle and SAP were giving their closing statements in their IP copyright infringement trial across the San Francisco Bay in Oakland, Calif., new Hewlett-Packard CEO Leo Apotheker -- Oracle's missing star witness in the case -- was participating in a conference call Nov. 22 detailing HP's fiscal fourth-quarter financial results.
Apotheker, who took over the HP job on Nov. 1, has been sought by Oracle for more than a month to testify in the case against SAP, where Apotheker worked for more than 20 years and served as co-CEO or CEO for several years.
However, Apotheker has been unavailable to appear, ostensibly because he has been busy touring HP's offices around the world.
"Over the past few weeks, I have been meeting with thousands of employees, customers and partners around the world, in order to assess HP's businesses and market opportunities before us," Apotheker told analysts and reporters on the earnings conference call.
"I've been from California to Massachusetts, to Germany, to Singapore, with many stops in between. In fact, I joked back in September that I might set a new world record for travel, and I think I might actually have done it during the past few weeks," he said.
"During that time, I've been listening, I've been learning, and I've been immersing myself in HP's businesses."
If Apotheker had been within 100 miles of the courthouse up until Nov. 21, he would have
been subpoenaed and required to testify on his knowledge about how and
why SAP illegally downloaded Oracle customer support software and used
it to try and sway customers over to SAP.
However, as of Nov. 22, the case is now closed, and no new witnesses can be called to testify. Nov. 22 was the first possible day that Apotheker could have revealed his whereabouts without facing a subpoena.
'A bit of an odd question'
"That's a bit of an odd question," Apotheker said when asked by journalist James Rogers of The Street.com where he was physically located for the call.
"Why, I'm on the media call concerning our fourth quarter in Palo Alto at HP's headquarters together with a bunch of people. Would you like a picture?"
Oracle is suing rival SAP for blatant copyright infringement without being able to question whom it considers its star witness-Apotheker, a former SAP CEO.
Apotheker was among SAP's three top decision-makers in 2007 when the Germany-based company's Texas-based affiliate, TomorrowNow, was caught illegally downloading numerous instances of Oracle customer-support software and thousands of pages of documentation. TomorrowNow was liquidated after the misdeeds were uncovered.
Oracle is demanding $2.15 billion in damages from SAP for its misdeeds, which it admitted Oct. 28 in a court document. Oracle contends that Apotheker was knowledgable about TomorrowNow's misdeeds and was complicit in the actions.
SAP, which already has paid Oracle $120 million to cover its court
costs, has told federal court Judge Phyllis Hamilton and the
eight-person jury that it believes $40 million is a more fair amount of
Case goes to jury
The case was sent to the jury Nov. 22. Oracle General Counsel Dorian Daley issued the following statement:
"Oracle brought suit to stop the illegal conduct and hold SAP fully accountable for its actions. Four years ago we discovered massive and indiscriminate downloading of software and support materials from an Oracle support website.
"SAP immediately and, for three and a half years, repeatedly denied wrongdoing and responsibility. But on the eve of trial SAP began a series of admissions to claims of copyright infringement, violations of state and federal computer fraud laws, unfair competition, breach of contract, interference and other claims that settled liability before the trial began.
"Trial evidence and testimony showed that the SAP Executive Board was fully aware of the illegal activity and still acquired TomorrowNow to unlawfully take Oracle support revenues and move Oracle customers to SAP products and to disrupt and discredit Oracle. SAP not only failed to take action to stop the behavior, but it expanded it for 18 months after Oracle filed suit.
"The pre-trial admissions and testimony over the last few weeks have exposed SAP's scheme to capitalize on the use of stolen intellectual property. While Oracle seeks damages to fairly compensate it for this massive theft, it is perhaps more important to expose the illegal conduct by a dominant player in the industry and to send a message that intellectual property rights must be respected."
SAP countered with this statement:
"The time for testimony and sidewalk claims by plaintiff's counsel are over. The actual testimony took place in court.
"We are very proud of the SAP legal team and our counsel Jones Day for their work in presenting our defense. We believe we have presented a solid case for the reasonable and appropriate compensation for damages by the limited actions of TomorrowNow. This case is not about who knew what, did what or supervised what; those issues were handled by stipulations prior to trial. This case is only about the damages, and we trust now in the jury to examine the evidence and testimony and reach a fair and just conclusion.
"As to Oracle's claims that SAP will forever be known as the infringer:
"SAP has a long history as a trusted partner, and we believe our legacy will extend beyond this matter. Throughout this matter over these three years, our customers and partners have stood by us, and for that we are grateful. The mark of a successful leading company is the way it handles its mistakes. As indicated in court, we regret the mistakes of TN, we apologize to Oracle, and we have sought to address these mistakes by compensating Oracle for the damages. All along, we have done the responsible thing by admitting to the mistakes, taking care of the customers, winding down the TN business, and accepting liability. We are confident we can put this matter behind us and continue our leadership of this industry."
HP reiterated its standard statement:
"Oracle's current stance is clear proof that they have been trying to harass L??Â«o and interfere with his work at HP. As HP has said repeatedly, Oracle had ample opportunity to question L??Â«o in the two years after he gave a full-day deposition. L??Â«o was never asked to give an additional deposition. As HP and SAP have noted, Oracle chose not to include Leo as a live trial witness until after he was named CEO of HP. L??Â«o had a limited role in the matter."
HP's financial report a good one
For the financial quarter, HP reported a solid sales period. Its fiscal
fourth-quarter profit was $2.5 billion [$1.10/share], compared a profit
of $2.4 billion [99 cents/share], for the year-ago period.
Total revenue was $33.3 billion, up from $30.8 billion in the same period in 2009. Adjusted income was $1.33 per share. Wall Street analysts had predicted HP to post earnings of $1.27 a share, on revenue of $32.7 billion.
For the current quarter (Q1 2011), HP projected revenue of about $33 billion.
Editor's note: This story was updated with new information about Mr. Apotheker's liability for subpoena in the Oracle-SAP case and statements from Oracle, SAP and HP on the case.