1?? The #1 reason: Massive share buybacks crushed equity
Oracle has spent tens of billions of dollars on share repurchases over many years.
What buybacks do to equity
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Buybacks reduce shareholders’ equity
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Cash goes down → equity goes down
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Retained earnings shrink
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Equity can approach zero or turn negative
When equity is small, D/E explodes, even if debt is stable.
Example
Oracle hit negative equity in FY 2022, which is why its D/E was extreme then.
2?? Oracle uses debt as a capital-allocation tool (not distress)
Oracle deliberately uses cheap long-term debt to:
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Fund buybacks
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Finance acquisitions (e.g., Cerner)
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Optimize capital structure
This is common for mature, cash-generating firms.
Key point:
Oracle’s debt grew slower than equity shrank.
So the ratio worsened mainly due to the denominator, not the numerator.
3?? Stable, predictable cash flows make high leverage manageable
Oracle has:
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Long-term enterprise contracts
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Sticky customers
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High renewal rates
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Strong operating margins
This allows Oracle to safely carry:
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Higher leverage
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Lower equity buffer
Credit markets price this in — Oracle still has investment-grade credit.
4?? Accounting effect: goodwill & intangibles
Oracle has made many acquisitions.
Result:
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Large goodwill & intangible assets
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Tangible book value becomes deeply negative
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Equity looks weaker on paper
This inflates leverage ratios but doesn’t mean cash-flow risk.
5?? Compare Oracle to peers (why it looks “worse”)
| Company | Buybacks | Equity Level | D/E |
|---|---|---|---|
| Oracle | Very aggressive | Low / negative | Very high |
| Microsoft | Moderate | Large positive | Low |
| Apple | Aggressive | Low equity | High-ish |
| Nvidia | Minimal | Very high | Very low |
Apple’s D/E is also elevated for the same reason, just less extreme.
6?? Why D/E is a bad metric for Oracle specifically
For ORCL, Debt-to-Equity is misleading.
Better metrics:
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Net Debt / EBITDA
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Interest Coverage Ratio
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Free Cash Flow / Debt
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Debt maturity ladder
These show Oracle is leveraged but not fragile.
7?? Bottom line (plain English)
Oracle’s debt-to-equity is high because equity was intentionally reduced, not because Oracle is drowning in debt.
Think of it as:
“A house with a big mortgage but very steady income — and the owner chose to keep little cash on hand.”
If you want, I can:
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Compare ORCL vs AAPL vs MSFT using better leverage metrics
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Show how buybacks mathematically destroy equity
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Pull Net Debt / EBITDA trends over 10 years
Just tell me what angle you want
