Thirty thousand Oracle employees woke up at six in the morning on Tuesday, March 31, to an email from “Oracle Leadership.” By the time they finished reading, their laptops were already locked. No phone call or warning. Just a note saying their jobs were gone and severance details would follow.
The mass layoff stunned many inside the company. Oracle had just reported its best quarterly revenue in 15 years, at $17.2 billion. Its stock rose 6 per cent on the same day it cut nearly 18 per cent of its workers. For those let go, the timing made little sense.
Behind the decision is a very large bet on artificial intelligence. Oracle has signed a $156 billion deal to build AI data centres over five years, mostly to serve OpenAI, the company behind ChatGPT. To do that, it needs around three million specialised computer chips. Two years ago, Oracle spent $6.9 billion a year on such construction. This year, that figure has jumped to $50 billion.
The company is now carrying over $108 billion in debt to fund this expansion. Barclays, the British bank, downgraded Oracle’s debt in November, warning it is one step away from “junk” status. Some banks have already stopped lending for these projects.
There is another problem. CNBC reported in March that OpenAI is now looking at newer, faster chips from Nvidia. Oracle built a massive facility in Texas, expecting OpenAI to fill it. That may not happen. The news about Nvidia chips could make some facilities outdated before full use.
Founder Larry Ellison owns 41 per cent of the company. Last September, his net worth briefly touched $393 billion, making him the richest person alive. Since then, Oracle’s stock has fallen from $346 to around $146. His fortune has dropped to roughly $201 billion in six months.
Employees expressed anger online. Copies of the termination emails appeared on Reddit’s ‘employeesOfOracle’ group. One person wrote about their father being let go after 20 years, just two years before retirement. “Not even a phone call,” they wrote. “The companies are evil.”
The Oracle layoffs signify that in the coming years, human jobs might be in jeopardy due to the domination of machine learning algorithms. To cope with the trends of innovation and AI, big companies could also suddenly disregard the lives of thousands of employees.
