Oracle trumpets successes to Wall Street while continuing layoffs, tightening spending. Oracle’s downsizing continues while revenue is parked on the sunny side of the street. Its fiscal 2027 Q1 revenue (ending August 2026) grew 30% to $19.3 billion while non-GAAP operating income rose 31% to $8.2 billion and non-GAAP earnings per share came in at $1.92, also up 30%. Some was driven by cloud growth. For those following their data center builds, their remaining performance obligations, a measure of contracted future revenue, grew by $26 billion but much of it was prepaid or with customer supplying their own hardware, meaning no cash outlay for Oracle. Another way of looking at this is conversion to revenue over the next 36 months which is now estimated at 50%.
This perked interest by investors. Barclays has upped its Oracle price target to $252 from $250 and kept an “Overweight” rating on the tech stock. The stock price is currently around $154, down 54% from its high. The Street
This is despite that debt is high and building. Total debt climbed to $155.9 billion on a trailing twelve-month basis, up from $90.5 billion just two years ago. Net debt now sits at $118.9 billion.
More Oracle employees got their severance notes and cutoffs at the beginning of September. Restructuring has a price and it’s in people. Business Insider quoted ‘insiders’ that they started on 14 September with a chilly 6am note signed “Oracle Management” similar to the previous round: “After careful consideration of Oracle’s current business needs, we have made the decision to eliminate your role as part of a broader organizational change. As a result, today is your last working day.” Severance was 4 weeks’ base salary plus 1 week per year of employment. The count of the layoffs, LOBs, and states is unconfirmed by Oracle but estimated at 3,000, several hundred in Washington state. Not quite the ‘double digit percentages’ rumored in August but possibly so on some teams. This is on top of the earlier 21,000 global cuts, 13% of their workforce, originally posted as near 30,000 [TTA 31 March]. Oracle’s original restructuring cost estimate of $2.1 billion on severance payments and other costs linked to restructuring through 31 August was increased this quarter by over $700 million, bringing that total to $2.8 billion. NDTV, Quartz
Updated 22 Sept: It appears that the employee severance package for most people, in the tech context, is skimpy. It’s four weeks of base pay plus one additional week for each completed year of service, subject to a 26-week maximum. Microsoft’s maximum was up to 39 weeks. Moreover, Reddit employee threads state that the WARN period is deducted from the base pay (e.g. two weeks of WARN, two weeks of severance) and accrued vacation is lost if state law allows it. The article in TechTimes confirms that laid off employees forfeit unvested stock, but does not have how severance affects corporate bonus and the employee stock purchase plan.
Oracle’s new CFO Hilary Maxon denied in the next day’s all-hands that the layoffs did not mean that remaining employees would be doing more with less. CEO Mike Sicilia cheered the survivors on with “How does the work that I’m doing help deliver a better outcome for a customer?” Not an off-target ask, but if the work load does not change especially in healthcare or implementing an EHR, how does this situation not mean doing more with less? 2+2≠5
Rounding out a roller coaster two weeks for Oracle was a 19-0 House Veterans Affairs Committee subpoena for Larry Ellison and Mike Sicilia. It was voted on by the House Veterans Affairs Committee and issued before Labor Day, when Oracle did not attend the 2 September hearing citing scheduling conflicts. The hearing covered the $17 billion increase in budget for Oracle’s EHR development for current costs and the three-year extension to May 2031. It turned out to be rather raucous with accusations of “unreasonable” and “corruption.” The original $10 billion estimate was by Cerner and is running out [TTA 27 August]. The new budget request brings the total to $26.94 billion. Apparently the House members found out about it through news reports, While the House is not in session until 9 November, House committees can meet anytime, but both hearings are after the midterms. Sicilia is due on 19 November and Ellison on 10 December. FedScoop, Becker’s, Stars and Stripes, MedCity News, Healthcare IT News (updated for appearance dates)
Updated. Why Congress is Madder than Wet Hens is revealed in this FedScoop article and timeline. Simply and quickly, back in July 2022, when things started to go sideways in the EHRM implementation [TTA 28 July 2022], then-EVP for Industries Mike Sicilia told the Senate Veterans Affairs Committee that Oracle would absorb any “performance or workflow” issue costs above the original $10 billion ceiling. For Oracle, after the Transformational Big Vision kvelling faded, Cerner’s painful stumbles became Oracle’s VA Migraine. There are also other add-on costs for infrastructure related to the EHRM but not part of Oracle’s costs. 170% is a big surprise in the VA budget and it blindsided Congress.
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