Larry Ellison’s disclosure last week that he planned to sell $7.5 billion in Oracle stock got tongues wagging across Silicon Valley and Hollywood – but what really sparked chatter was the quick about-face that came a day later.
The 82-year-old software tycoon – who built one of the great American tech giants through decades of legendarily shrewd M&A deals – revealed in a Friday securities filing that he planned to sell 50 million Oracle shares.
Ellison adopted the so-called 10b5-1 plan on June 22 and the share sale was slated to be completed by Oct. 24, according to the filing. So it struck many as odd when the very next day – a Saturday, no less – he revealed in a second filing that he had changed his mind, that he hadn’t sold any shares and that he was scrapping the whole idea.
And what’s happened since? Oracle this week reportedly started yet another round of layoffs after slashing 13% of its workforce last year as it makes a massive bet on AI infrastructure, according to reports. The stock has continued to bounce downward.
Was this Ellison being crazy like a fox? Some folks are reckoning not – and that the disclosures instead look like the fumblings of a player who’s at the close of his career and ready to pack it in.
“Larry obviously concluded that selling could be damaging to Oracle supporting his wealth and the company’s,” said one Silicon Valley financial executive who asked not to be quoted by name.
“The unexplained Ellison reversal introduced another layer of uncertainty exactly when investors were already questioning Oracle’s business model.”
To be clear, I’m not saying I necessarily agree that this is a simple case of a blunder. Count me among those who are still scratching their heads.
A press rep for Oracle had no immediate comment.
Ellison, it should be noted, is no longer the CEO of Oracle, but he’s still executive chairman and also its chief technology officer. Meanwhile, Oracle shares are down roughly 53% from last September, Fox Business’s Teuta Dedvukaj reports.
Capital expenditures are surging while free cash flow turned negative by roughly $5 billion as the company attempts to transform itself into a legitimate player in AI alongside Anthropic and OpenAI, largely through borrowed money.
“The market is now increasingly asking whether or not Oracle’s revenue contracted out from its AI buildout will arrive quickly enough to service all its debt,” my source adds.
Ellison holds a lot of Oracle shares — roughly 1.1 billion of them, or 40% of the company. At his age, selling some stock for the sake of estate planning – even for an individual worth around $200 billion depending on the day – would seem like a reasonable move.
Suffice it to say that Larry has taken a decidedly unorthodox approach to estate planning of late. Earlier this year, he decided to provide financial guarantees for Paramount Skydance, the burgeoning media conglomerate run by his son David Ellison, to buy rival Warner Bros. Discovery for $81 billion.
That’s a pretty large guarantee given the legal contretemps created by those lefty state attorneys general who have sued to block the deal over antitrust concerns. It’s a dumb case since both Paramount and WBD are middling companies that need to combine to compete against the likes of Netflix and Big Tech.
It’s also costly – another reason why Larry probably needs some “liquidity.” If the deal doesn’t go through, the Ellisons are on the hook for a $7 billion breakup fee. In the meantime, the Ellisons will soon be forced to cough up $7 million a day as part of a “ticking fee” enticement they used to get WBD to agree to the deal.
There’s one more reason why you can see Larry looking to finally cash in (he rarely sells his Oracle stock). As questions about Oracle’s AI buildout mount, Ellison’s net worth is now about half the $400 billion it was pegged at this time last year.
Yes, that amounts to $200 billion and it seems like a lot. But Wall Street’s AI anxiety and David Ellison’s pricey Hollywood projects could add up to a painful tab in the months ahead.