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Oracle Corporation
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== Risks == '''Operational risk''' Given the cloud-based nature of many of Oracle's services, operational risk becomes a significant consideration. Cloud services are reliant on stable and resilient infrastructure. Any technical issues, outages, or disruptions in data centers or networks could lead to service downtime and impact customer satisfaction. Furthermore, Oracle's cloud services need to be scalable and able to handle increased demand. Inadequate infrastructure to accommodate growth or surges in usage could result in performance issues and customer dissatisfaction. '''Share repurchase risk''' There is no guarantee that Oracle will keep buying back common stock like he did in the previous 3 years. In fact, it is expected from the company to suspend or reduce its share repurchase program given that it resulted in equity deficit in 2022. Furthermore, the company stated in its annual report that it is not going to increase its share repurchases until their gross debt is reduced below some unspecified level. '''Reputational risk''' Oracle holds vast amounts of sensitive data from its customers. Any breach of this data could lead to significant reputational damage, legal consequences, and loss of customer trust. In case customers lose their trust, they may stop buying products or continue using them. This could result in a revenue loss and high lawsuit expenses. '''Acquisitions-related risks''' Oracle has followed an aggressive acquisition strategy throughout the years. That can be seen by the large number of acquisitions that have been completed, such as Cerner, Adi Insights, FOEX, Federos, FarApp, among others. An aggressive acquisition strategy, while potentially beneficial in expanding a company's market presence and diversifying its offerings, also comes with several risks. The most important risk is the challenge of integrating the products and workforce of all these companies into Oracle's existing operations. Poor integration can lead to inefficiencies and cultural clashes. '''Leverage levels''' The company's debt level is really high compared to its competitors, which can be seen by its debt to equity and debt to capital ratios. This is a result of its share repurchase program as well as the aggressive acquisition strategy which involves a lot of debt. The company might have to suspend its repurchase program or reduce its capital expenditures in order to be able to reduce its debt levels. S&P has assigned a credit rating of BBB, which is low when compared to its competitors (e.g. Microsoft, Salesforce). Such a low credit rating can potentially lead to higher cost of debt moving forward<ref name=":0" />. <references />
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