Did Oracle Need To Fire 21,000 Because It Is In Trouble?

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Badly damaged tech company Oracle (NASDAQ: ORCL) fired 21,000 people. It said they were being replaced by AI. It is 13% of the company’s total workforce. Oracle took a charge of $1.84 billion.

In its 10K, the company explained “… improve operational efficiencies, including through the adoption and integration of AI technologies…” But is that the case? More and more investors are skeptical of this explanation. What if the company is just in financial trouble?

Financial trouble is a real issue. Oracle’s stock is down 14% in the last year. The S&P is 25% higher.

Earlier this month, investors expressed worry about Oracle’s data center expenditures; In its fourth fiscal quarter, it spent $16.5 billion on these facilities. That was much higher than expectations. Free cash flow was a negative $1.87 billion. As Axios pointed out, this brings “the sum of the cash it has burned over the last year to roughly $23.7 billion.”

Another fear is that Oracle has raised about $43 billion in debt and equity. It strongly hinted that it would raise nearly as much in the next year.

Here is the fact– Oracle is not Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Anthropic, or OpenAI. It wants to play with the big boys, but doesn’t have the money to do so. It will, therefore, pay dearly for each dollar it raises. It is also not in the conversation about the companies that may benefit massively from AI as adoption rises, if it does.

Oracle also operates in a sector where investors worry that large companies are cutting back on AI use because they are not getting results. Oracle will have trouble waiting for that out. And, to wait for it, it will need to be part of an investment in AI data hyperscalers, which will, according to McKinsey, spend over $5 trillion on infrastructure in a little over three years.

Oracle can’t be a major player in enterprise AI, either. That means that the layoffs at the company will keep coming

The post Did Oracle Need To Fire 21,000 Because It Is In Trouble? appeared first on 24/7 Wall St..