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HP: Oracle Partnership Is Under Strain

HP's partnership with Oracle is under pressure following HP's Mark Hurd lawsuit, according to the PC maker's interim CEO Cathie Lesjak.



) --


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partnership with


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is under pressure following the computer maker's decision to sue Mark Hurd, according to HP interim CEO Cathie Lesjak.

Speaking at the Citigroup Technology Conference in New York, Lesjak said that HP is already feeling the fallout from the Hurd lawsuit. HP

sued its former CEO

on Tuesday, alleging breach of contract and threatened misappropriation of trade secrets just one day after Oracle appointed Hurd as co-president.

Cathie Lesjak

As expected,

fiery Oracle CEO Larry Ellison was quick to slam HP

, calling the lawsuit vindictive as he

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questioned the companies' longstanding partnership.

"As you can imagine, with the press that Ellison had yesterday, it strained it a bit," admitted Lesjak. She added that she is hopeful that HP and Oracle will iron out their differences. "At the end of the day, business will prevail -- we believe that HP is important to Oracle and Oracle is an important partner of ours."

Ellison, however, is on the warpath, making Lesjak's comments sound a little like wishful thinking. The Oracle chief blasted HP in the statement released after market close on Tuesday. "The HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees," he raged. "The HP board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace."


recent departure from HP

amid an expenses scandal that followed a sexual harassment investigation sent shockwaves through the tech sector. A darling on Wall Street, Hurd had earned a fearsome reputation for cost-cutting and was credited with turning the tech giant's fortunes around.

HP is concerned that Hurd will take its trade secrets to Oracle.

"We have not filed suit against Oracle, we have filed suit against Mark," said Lesjak at the New York event, prompting laughter from the audience. "Mark signed a number of agreements -- it's important for him to remember that he signed those agreements."

According to HP's lawsuit, Hurd signed a trade secret protection agreement in February 2009 that specifically addresses confidential information. In the documents that the tech giant provided to the public, Hurd agreed not to provide confidential information to "any other employers, either during or subsequent to my employment with HP."

Lesjak was also asked about HP's search for Hurd's replacement, explaining that the company is pleased with the candidates assembled by its search committee.

"Now it's just a question of getting everyone scheduled and through the interview process," she said, adding that the committee is interviewing both internal and external candidates.

Regarding whether HP paid too much money for


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-- last week HP won a fierce bidding war with


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for 3Par, eventually paying $33 a share, or $2.35 billion, well above Dell's original bid of $18 a share -- Lesjak said, "we had a walk-away price and we got it for less than

that. From an M&A perspective, 3Par was no different from any other thought process around M&A."

HP shares fell $1.44, or 3.61%, to $38.48 on Wednesday, despite a broader advance in tech stocks that saw the Nasdaq gain 1%.

--Written by James Rogers in New York.

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