Why is Oracle struggling?
However, unlike its largest competitors, whose profits are paying for their data center projects, Oracle is borrowing heavily. Some investors are concerned the company will struggle to repay its debt if AI demand falls short of expectations. Oracle's business with OpenAI has added to investor concerns
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Orcl went from a low debt (10 billion) company with low interest on debt, owning all its buildings and printing money.
Then some cretin decided to get levered up to 110 billion in debt, high interest, fire tens of thousands to "cut your way to prosperity", buy a flagging crapheap called Cerner, dump real estate and sell everything and fire anyone that is expensive to what?
Be waiting for IOUs to turn into cash from ClosedAI and Scam Altman? Yeah. Not a great plan.
Then they have the nerve to refer to the only business with any margin as a "legacy business"
Lots of companies have competitive advantage. Oracle has None.
Think Amazon, its main stream of business is its market place and AWS. they earned money there and use that money for its purchases.
Think Microsoft, it has made all its word, outlook as subscription model and self serving.
Oracle doesn't have any cloud based products so far apart from its OCI offerings. Still staying with its on-premise software and sales person selling them. It doesn't have any "DATA" generating product like amazon to dive deep into AI tech. Thats the main reason it moves from software to datacenter.
Its like I don't have money to attend the party. but I will attend the party as a DJ who gets paid.
Oracle doesn't have any revenue streams. Neither its employees.
Oracle has committed to building a datacenter for OpenAI, a company that not only hasn't produced a profit but in fact is operating quite in the red. What was it, 300 billion dollars for that? Plus the new building in Nashville for their new world headquarters they're trying to hire people for.
Questionable decisions at best. I'm sure there are others they've made that we don't know about yet. Are they TRYING to bankrupt the company? Cutting headcount to save money, who is going to suffer? No doubt, ultimately, the customers along with the employees. We're watching a slow motion train wreck here. I mean WTF???
AI demand will not drop off
Cost of meeting that demand will
Debt will not vanish unless repaid