Oracle Plans Thousands of Job Cuts in Face of AI Cash Crunch

[ruet]

Source: Yahoo News

(Bloomberg) -- Oracle Corp. is planning to ax thousands of jobs, among its moves to handle a cash crunch from a massive AI data center expansion effort.

The job reductions will affect divisions across the company and may be implemented as soon as this month, according to people familiar with the matter who asked not to be named discussing the still-private plans. Some of the cuts will be aimed at job categories that the company expects it will need less of due to AI, two of the people said.

Led by Chairman Larry Ellison, Oracle is embarking on a historic build-out of data centers to power AI workloads for customers such as OpenAI. The company, long known for its database software, has been making a transition the past few years to bulk up its cloud computing unit with a focus on AI, intending to become a viable competitor to market leaders Amazon.com Inc. and Microsoft Corp.

Wall Street projects the expenditures by the cloud unit for data centers to push Oracle’s cash flow negative over the coming years before the spending begins to pay off in 2030, according to data compiled by Bloomberg. Last month, Oracle said it would raise as much as $50 billion this year through a combination of debt and equity sales.

Read more: https://finance.yahoo.com/news/oracle-plans-thousands-job-cuts-180243222.html

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[sakabatou]

1. I'm hoping the AI bubble bursts sooner than later

[OC375]

2. SAP is going to eat Oracle alive.

[Miguelito Loveless]

3. The vultures

are coming home to roost.

[unc70]

4. Ellison and related companies just overspent for WB Discovery

They now have to leverage everything get the cash for the merger, the cash that Ellison's, et al will receive as they cash out. What a disaster in the making.

Ellison's companies have always used aggressive accounting. For example, "revenue" would be booked before any work was performed, before contracts were signed, etc., and without provisions for cost of deliverables or liabilities. If it moved, it was booked as sales and as revenue, often well after the end of the quarter.

From what little I know of the acquisition of WB Discovery by the Ellisons, I see all of the entities involved being loaded up with debt, stripped of their valuable assets (looted), and hollowed out.

[SWBTATTReg]

9. Good, can't stand Ellison. And, as an additional thought, what exactly does AI do for an application? As a long-time

systems developer in IT, Specs are laid out by clients, costs are tabulated, and work is eventually scheduled, if determined to be feasible. I think that the backlog of AI-feasible projects is so new, so in need of being developed, created, fleshed out, that I, IMHO, don't think that no one really knows 100% what AI can bring to the table, perhaps a very few things, but lots of tasks? I am doubtful many are out there. I suspect that the infrastructure for AI development is yet to be put in place. The development of the AI code to be designed as well as the engineered machine components (if required) remain to be developed. So many tasks, similar to writing computer code.

Will be interesting to watch. Kind of like watching the Internet be born on a larger basis in the early 1980s (minor platforms by the RBOCs, AT&T), which then after the breakup, developed into many different channels/outlets.

[ToxMarz]

13. Hes also part (I think the biggest part) of the group that bought Tiktok

Don't know anything about his finances, but he's gotta be stretched pretty thin.

[flashman13]

5. The first sign of the great unraveling of the AI hype.

The cut backs are necessary because of, "cash flow negative over the coming years before the spending begins to pay off in 2030 ". That's a nerdy way of saying we are losing our ass because of over investment and lack of customers. They plan to raise another $50B this year to keep the ball in the air. That is an awful lot of debt to cover until 2030. It takes magical thinking to believe that on day certain, 2030, income is going to exceed expenses.

I find this astonishing, but I heard that there are over 5,000 data centers on line or under construction in the country. That represents 45% of all the data centers in the world. Just how much AI is enough AI? There is only a finite number of potential AI users. When you slice that pie into 5,000 pieces you have to wonder how any organization can pay the debt and make a profit. It sounds like we might hear a lot more about "cash flow negative". You can't invest billions with returns in the millions for long and survive.

And let's set aside the cost of building electric infrastructure to power these data centers. Some of these outfits are proposing building their own dedicated nuclear (or fusion???) power plants to power these monstrosities. Utterly ridiculous!

&t=8s

[highplainsdem]

7. I wonder how much of the data centers is needed just for AI slop. Google's Gemini allows 1,000 images a day

for the $20 tier. 100 a day for the free tier, Billions of worthless images generated every month, maybe every day, almost all discarded immediately as more images are generated in seconds, until the AI user gets something they want to try to pretend is their own "art."

So much water, electricity and money being wasted for pure slop...but it does hook some people on AI so they don't care about all the harm it does.

[Dem_in_Nebr.]

6. Fire AI!

Hire the people back!

[jmowreader]

8. The REALLY worrisome part is the AI part of Oracle won't ever turn a profit

It requires massive amounts of hardware, buildings and power, and the customers for AI are NOT going to pay what it costs the company to be profitable. About a week ago I was driving my non-AI-powered automobile with my radio rolled up on one of the SiriusXM sports channels. On comes a commercial for Oracle AI... "We do this for 30 percent less than the competition."

[Wonder Why]

10. Why didn't he use AI to avoid the cash crunch or is AI trying to eliminate the competition?

[RainCaster]

11. I can't wait to see Oracle crash & burn

They have so very little to offer and yet they are spending capex at a rediculous rate. Then they have chosen to cut opex which will cut their valuation.
Their customers will quickly see that they can use AI to code up a replacement for Oracle's database using Open Source. At the same time, their customers are cutting their seat count for licenses because they are replacing employees with AI. Oracle loses on all fronts.

[FakeNoose]

12. No Americans will have the money to buy his products, that's for sure

That's what happens when you lay everyone off.