Pulse News

**Oracle’s Cash Squeeze**

By Martin Peers

Mar 10, 2025, 5:00pm PDT

Larry Ellison has done a remarkable job of making Oracle part of the conversation around artificial intelligence data centers alongside much bigger cloud rivals such as Microsoft and Google. But as Oracle's February-quarter results, released on Monday night, show, the enterprise software firm is hitting the limits of what it can spend on new data centers, at least without borrowing a bucketload of money. Ellison himself may have more financial capacity than Oracle right now.

In the latest quarter, for instance, Oracle generated just $5.9 billion in cash from operations. It spent $5.86 billion of that on capital expenditures, triple the amount a year earlier. The result is that Oracle's free cash flow—funds remaining after capex spending—has nearly evaporated. For the first three quarters of its 2025 fiscal year, free cash flow dropped 70% to $2.5 billion.

Astoundingly, despite this decline, Oracle announced today it would increase its dividend by 25%, lifting the annual payout to $5.6 billion. Oracle appears to be borrowing money to help pay for the dividend right now; its already hefty debt rose slightly in the February quarter.

Judging by Oracle executives' commentary, this cash squeeze should be a temporary phenomenon. Oracle reported a big increase in the value of contracts it has signed whose revenue has yet to be recognized, thanks to new cloud deals it has struck with companies such as OpenAI and AMD. Oracle CEO Safra Catz was upbeat about revenue growth accelerating in the next two fiscal years. Perhaps the dividend increase reflects Ellison's optimism about Oracle's future.

He personally has plenty of reasons to be optimistic. Ellison owns 1.1 billion shares in Oracle, a stake worth $164 billion. And after the dividend increase, he'll earn $576 million a quarter in dividend payout. That comes in handy for his extra-Oracle dealmaking, such as the acquisition of Hollywood studio Paramount Global his son, David Ellison, is handling. President Donald Trump has also flagged Oracle as a possible buyer for TikTok, which is an Oracle cloud customer. If Ellison wants to be a dealmaker in the TikTok bidding, he may have to buy it himself.

**Proof of Life**

What a day. The stock market fell sharply—the Nasdaq Composite by 4% and the S&P 500 by 2.7%—thanks to tariff uncertainty and increasing recession talk that even President Trump isn't shooting down. Amid the selling, though, we saw signs of life in the deal market in the shape of two multibillion-dollar acquisitions, one in AI and one in real estate.

The biggest was ServiceNow's $2.85 billion stock-and-cash purchase of AI software firm Moveworks, part of an effort by the enterprise software firm to improve its AI search and agent offerings. Meanwhile, mortgage lender Rocket is buying real estate brokerage firm Redfin for $12.50 a share in Rocket shares, or $1.75 billion. At least, that's what the offer was worth at the beginning of the day. By the afternoon, it was down to just $10.58 a share, thanks to a 15% drop in Rocket's stock price.

Either way, it was good news for Redfin shareholders. Their stock had shriveled to $5.82 a share as of Friday—compared to its 2017 initial public offering price of $15. Hopefully, though, most of Redfin's early public shareholders are long gone—if they had any sense, they would have sold when the stock peaked at around $75 in early 2021.

Since then, rising interest rates, triggering a slowdown in the housing market, have taken a toll on the business. As we said in this prescient story back in 2017, when Redfin went public, Redfin and other real estate firms were "vulnerable to sharp swings in the real estate market." Rocket, as a mortgage company, had the same vulnerability—only now it's even more exposed.

**Tariff Sentiment**

Much of the stock market sell-off of the past week stems from President Trump's tariff policies, and is exacerbated by his frequent changes of mind about when he'll introduce tariffs. But even if he was consistent about the timing, tariffs would not be popular, as our readers have demonstrated. In this survey we reported on last December, 80% of respondents said higher tariffs would hurt the tech industry—only 12% thought they would help.

We're yet to see the specific impact, but clearly it will badly hit hardware makers, including Apple and Nvidia. Other companies will face increased costs as the price of equipment goes up. It's little wonder tech stocks have been badly hit in recent days.

**In Other News**

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Martin Peers is a columnist and co-executive editor of The Information, where he has worked since 2014. He was managing editor from 2015 through 2021. He previously worked for The Wall Street Journal and Daily Variety, among other publications. He is based in New York and is on Twitter @mvpeers.