Oracle - a mess of epic proportions
For a company so insistent that it did not bite off more than it could chew, it sure looks like the figurative fire has gone out of control and is burning everything down.
Oracle manufactured its own mess by trying to cash in on the AI investment hype by going its own route of being in this highly lucrative market - trying to build huge amounts of data centres now, with the expectations that demand will hit fast and hard, and they will then reap even more profits. It however could not do thing fast enough, nor keep up with the spending required.
Larry Ellison (CTO of Oracle) is as slimy as corporate leaders can be, willing to do anything and sacrifice anyone for personal gains. This time it looks like he is willing to have his company's remaining shreds of reputation be bartered off for more money entering his pockets.
To fund the build out of data centres for an agreement with Openai (another company that seemingly has lost the plot), Oracle sold bonds totaling to 18 billion dollars, then strung these investors out to dry. In their declarations they stated the possibility of need another round of bond sales, even though it was already set in stone. The next round of bond sales to raise 38 billion dollars absolutely rocked the value of the prior batch of bonds, with bond markets reacting very negatively at the credit risk posed by Oracle's activities.
How it would shake out was still yet to be resolved, yet another bombshell struck: the two companies will now go their separate ways. Because of the need to continue construction activities and not being able to procure funds from financial institutions, Oracle has now announced the cutting of around 30,000 jobs.
Put all these into perspective by looking at what has happened along the way until today. Larry Ellison has brought Oracle along into owning a stake of Tiktok's Usa operations by ingratiating himself to the Usa president. The company (it might as well be Mr. Ellison) declared handsome dividends (a total of about 1.4 billion dollars), of which Larry owns more than 40% of the company's stocks - all while there were constant and ongoing capital expenditure concerns. Larry also involved himself with his son's dealings at Skydance and its intended acquisition of Warner Bros.
How the company and its notorious executive can be viewed as worthy to invest in, especially with all these context, boggles the mind. Investors should be leaving in droves and the market could be the catalyst for Oracle to fade away and someone more competent step in.
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