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HP's latest lawsuit heightens rivalry with Oracle

By Poornima Gupta and Dan Levine

SAN FRANCISCO (Reuters) - Hewlett-Packard Co sued Oracle Corp on Wednesday over a chip dispute, highlighting the ever-growing breach between the one-time allies.

The lawsuit follows a "formal legal demand" letter that HP sent to Oracle last week to force the world's No. 3 software maker to reverse its decision to discontinue software development on Intel Itanium microprocessor.

"The silence from Oracle is deafening," HP's chief spokesman Bill Wohl said, referring to the response on the letter. "We are very disappointed it has to come to this."

Oracle said in a statement that HP's claims Oracle breached an agreement to maintain Itanium was "not true."

HP's lawsuit is "utterly malicious and meritless," the statement said.

The lawsuit, filed in a California state court, is the latest move in the high-stakes dispute between both companies, which have been partners for the last 30 years and have about 140,000 common customers.

HP and Oracle became intense rivals after Oracle's purchase of Sun Microsystems pushed it firmly into the server hardware market, in which it previously cooperated with HP.

Oracle hired former HP chief executive Mark Hurd last year after he left HP amid questions over his relationship with a female contractor. HP filed a trade secrets lawsuit against Hurd related to the Oracle hire, which was soon settled.

"In a mere eight months, Oracle has gone from arm-in-arm partnership with Hewlett-Packard to bitter antagonist," the lawsuit said.

FRIENDS TURNED FOES

Tensions between the two companies rose further when HP hired former SAP AG chief executive Leo Apotheker as its CEO. During his time at SAP, Apotheker was locked in an extremely bitter copyright infringement battle with Oracle.

After Apotheker joined HP last year, Oracle CEO Larry Ellison publicly charged Apotheker with overseeing an "industrial espionage scheme" at SAP, centered on stealing Oracle's software. HP called Ellison's language an attempt to harass Apotheker and interfere with his work at HP.

Now, Intel's Itanium microprocessor is at the heart of the battle between HP and Oracle.

Oracle decided in March to discontinue its support for Itanium, a heavy-duty computing microprocessor, saying Intel made it clear the chip was nearing the end of its life and the company's focus was on its x86 microprocessor.

Oracle's decision has been dubbed as "anti-customer" behavior by HP. HP said it is making the demand on behalf of customers who have made a big investment in the Itanium chip.

Intel Chief Financial Officer Stacy Smith told Reuters in April the world's biggest chipmaker was committed to Itanium and would continue to invest in it along with its x86 server processors. A spokeswoman reiterated those comments on Wednesday.

HP's case against Oracle in the Superior Court of the State of California, County of Santa Clara is Hewlett-Packard Company v. Oracle Corporation, 11CV203163.

(Additional reporting by Noel Randewich in San Francisco; editing by Andre Grenon and Lisa Shumaker)

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