Oracle is considering laying off 20,000 to 30,000 employees and may sell some of its business units to fund its AI data-center expansion, according to a report by CIO citing investment bank TD Cowen. Banks in the US have pulled back from financing Oracle’s AI projects, prompting the company to explore ways to free up $8 billion to $10 billion in cash flow.
The company is also reviewing a potential sale of Cerner, its health-care software unit acquired for $28.3 billion in 2022. The move comes as several banks have stepped back from lending for Oracle-linked data-center projects.
“Both equity and debt investors have raised questions regarding Oracle’s ability to finance this buildout,” the TD Cowen report said.
The financial challenges stem from the company’s massive infrastructure commitments, which require $156 billion in capital expenditure. Layoffs could be part of a broader strategy to cut costs and secure more funds for AI projects. So far, Oracle has not officially announced any measures.
Oracle remained a trending topic on Google Trends on Monday. If the layoffs occur, they could have a notable impact on the tech sector. The company’s borrowing costs have increased sharply after banks reduced financing support.
TD Cowen noted that lenders have nearly doubled the interest rate premiums for Oracle’s data-center project financing since September, pushing borrowing costs to levels typically reserved for non-investment-grade companies.
Higher financing costs have also stalled deals. “Multiple Oracle data-center leases that were under negotiation with private operators struggled to secure financing, preventing Oracle from securing the data-center capacity via a lease,” the report said.
Without financial support, private data-center operators cannot build the facilities Oracle needs, creating a bottleneck in the company’s infrastructure rollout.
Oracle expects to raise $45–50 billion this year to expand its cloud infrastructure capacity. Co-founder Larry Ellison said the company plans to meet funding goals using a combination of debt and equity financing.
In a statement, Oracle said, “Oracle is raising money to build additional capacity to meet the contracted demand from our largest Oracle Cloud Infrastructure customers, including AMD, Meta, NVIDIA, OpenAI, TikTok, xAI, and others.”
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