Hurd Moves to Oracle (ORCL): A New Reason to Buy

"If we look back at the numbers, we can see that during the twelve months before Hurd joined HPQ, its non-GAAP operating profits per fully diluted share were 'only' $2.96.

"During the last twelve months, HPQ reported non-GAAP operating profits per share of $6.10. This means Hurd and team managed to growth operating profits by 106% while revenue grew only 25%.

"In my view, that is a clear demonstration that Hurd not only knew how to correct HPQ's negative trajectory, but also leverage its strengths and expand its scope through profitable acquisition.

Wall Street was not fooled by the adjective-laden media hit on Hurd and agreed with my contention that without Hurd at the helm, the risks associated with an investment in HPQ were higher and, as such, the price needed to be pushed lower.

"As it stands today, I continue to believe its best to remain a spectator. This is not to say there's not upside potential for HPQ if it is able to find the right leader; there is.

"However, with valuations across the tech sector trending near to record lows, I think there are plenty of other opportunities with similar or greater upside where risks can be quantified more accurately.

"Meanwhile, Hurd has now accepted a position at Oracle as its co-president Wall Street had its second opportunity to vote on Hurd's value; we believe ORCL's founder and Chairman Larry Ellison might be right.

"Shortly after Hurd was shown the door at HPQ Ellison stated that it was the biggest mistake in tech-land since Apple fired its founder Steve Jobs in the 1990s.

"The press has been quick to point to the fact that with its purchase of Sun Microsystems, ORCL will compete against HPQ in the server space.

"However, this radically misses the point - this isn't about the server market; it's about services and solutions. Where HPQ was very effectively heading under Hurd's leadership and where ORCL has charted its course to go is the turnkey solutions business and this means new business models will need to be developed.

"While there are plenty of CEOs who see this horizon now, none has demonstrated the ability to guide a company there better than Hurd.

"Bottom Line: I was bullish on ORCL prior to it bringing Hurd on board and I agree with Wall Street's assessment that with Hurd there, the chances of ORCL's success are notably higher. Based on this move, I'm setting my 12-month price target range for ORCL at $30 to $34."

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