Warren Buffett says he ditched his stake in Oracle because of his experience getting burned by IBM (2024)
In late 2018, Warren Buffett's Berkshire Hathaway bought a $2.1 billion stake in Oracle, which looked like a big vote of confidence in the database giant as it attempts to remake itself into a cloud computing company.
The Oracle of Omaha doesn't tend to invest in a lot of tech stocks, making this all the more significant.
But then Buffett did something even rarer: he immediate bailed on Oracle, selling its stake off within months of buying it in the first place, Berkshire Hathaway disclosed this month when Oracle vanished from its list of stocks.
The industry gossip that when Buffett took a closer look at Oracle, he had negative flashbacks to his experience with IBM, which is also chasing the cloud. Buffett was an investor and a vocal fan of IBM for a while. But as the company shrank quarter after quarter, and the stock stagnated, his stake in IBM was widely considered to be a blemish on Buffett's investing track record, until he ditched the company completely a year ago.
During an interview on CNBC's "Squawk Box," on Monday, Buffett explained the quick turnaround on his Oracle turnaround and basically confirmed the speculation:
"[Cofounder and CTO] Larry Ellison's done a fantastic job with Oracle. I mean I've followed it from the standpoint of reading about it. But I felt like I didn't understand the business,"
"Then, after I started buying it, I felt I still didn't understand the business. I actually changed my mind in terms of understand and not in terms of evaluating it. I think, I mean, Oracle is a great business. But I don't think, particularly after my experience with IBM, I don't think I understand exactly where the cloud is going.
"You know, I've been amazed at what Amazon has done there. And now Microsoft is doing it as well. So I don't know where that game is going."
No one can be surprised that Buffett felt like he couldn't understand Oracle's cloud business.
Oracle remains a giant in its bread-and-butter businesses — specifically, databases and enterprise software applications. But those businesses are mature, with little room for growth. Most of the growth in enterprise software is coming from cloud computing, where companies rent software and storage and servers from an IT company, instead of buying and maintaining it all themselves. As Buffett indicates, Amazon Web Services is considered the leader in cloud services, with Microsoft Azure in a strong second place.
By some estimates, only about one-third of corporate IT needs are in the cloud today, and 80% of them will be moved to the cloud by 2020.
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Oracle must claim a good chunk of this new market, or watch its customers launch their new products and businesses on its competitors' software, hosted on its competitors' cloud.
Oracle has been saying that its young cloud business is going gangbusters. But in the middle of 2018, Oracle stopped reporting cloud revenues, in a move that hides the business's health from public view. Its reporting structure now blends cloud revenue with traditional software sales. Oracle attributed the change to new accounting standards.
Meanwhile, insiders previously told Business Insider that some of Oracle's salespeople had at one point been gaming the system by adding cloud credits to customer contracts even when customers had no intention of using Oracle's cloud. Those sales methods were banned, as we reported.
Then at year's end, Oracle said that Thomas Kurian, the long-time executive in charge of its cloud, had taken a leave of absence and was expected back at his post. But Kurian didn't come back. He took a job running Google's cloud instead.
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Meanwhile, Buffett — wary from IBM, as he says — got out.
Warren Buffet is known as the greatest investors of all time and one of the world's richest people. He started investing in stocks at the age of 11 and has continued to do so till this day, in his 80s. He is called “Oracle of Omaha”, because he lives in a a small blue-collar city of Omaha, Nebraska.
Buffett completely divested his IBM shareholding. The initial sale of 94.5 percent of its stake occurred in late 2017, and that money was reinvested into Apple, where it has stayed since. The remaining 2 million shares were sold in the beginning of 2018 and also converted into Apple.
Who Is the Oracle of Omaha? The Oracle of Omaha is a nickname for Warren Buffett, who is arguably one of the greatest investors of all time. Buffett is the chair and CEO of Berkshire Hathaway, a company that he became the controlling shareholder of in the mid-1960s.
With its strength in database management and a cloud infrastructure business known for security, Oracle seems like the kind of business that should thrive in the AI era, and indeed, it's opening data centers faster than it ever has before.
According to the latest TipRanks data, approximately 53.24% of International Business Machines (IBM) stock is held by retail investors. Who owns the most shares of International Business Machines (IBM)? Vanguard owns the most shares of International Business Machines (IBM).
He has been on the board of trustees at Duke University and Drake University. In a May 2021 interview, Warren Buffett confirmed Abel as his future successor as CEO of Berkshire Hathaway. Abel's handling of CalEnergy's take-over of a British utility in the 1990s is credited to mark the start of this transition.
Buffett was raised as a Presbyterian, but has since described himself as agnostic. In December 2006, it was reported that Buffett did not carry a mobile phone, did not have a computer at his desk, and drove his own automobile, a Cadillac DTS.
What Kind of Vehicle Does Warren Buffett Drive? Warren Buffett drives a Cadillac XTS, a car that is far from the flashy, high-end luxury vehicles that one might expect a billionaire to own. Consistent with his down-to-earth lifestyle, Buffett's choice of vehicle is practical, reliable, and understated.
As of 2024-09-17 03:20:00 PM CDT (updates daily): The Stock Market is Significantly Overvalued according to Buffett Indicator. Based on the historical ratio of total market cap over GDP (currently at 196.8%), it is likely to return 0% a year from this level of valuation, including dividends.
A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.
Although old-guard favorites such as American Express (AXP) and Coca-Cola (KO) still form the core of the portfolio, Buffett & Co. have taken a shine to names such as Apple (AAPL) and Amazon.com (AMZN), and even to lesser-known firms such as Nu Holdings (NU).
SDL changed its name to Relational Software, Inc (RSI) in 1979, then again to Oracle Systems Corporation in 1983, to align itself more closely with its flagship product Oracle Database. The name also drew from the codename of a 1977 Central Intelligence Agency project, which was also Oracle's first customer.
The Oracle takes its name from the 17th century Oracle workhouse built by funds from a local man, John Kendrick. This once occupied a small part of the site now occupied by the shopping centre.
Before starting software development laboratories, Larry was working at Ampex Corporation. One of the projects on which he was working was for CIA and the name of the project was 'ORACLE', later he took this name for his company SDL and renamed it to ORACLE.
Introduction: My name is The Hon. Margery Christiansen, I am a bright, adorable, precious, inexpensive, gorgeous, comfortable, happy person who loves writing and wants to share my knowledge and understanding with you.
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