Buy Oracle as a small, risky position; strong fundamentals offset by severe debt/interest expense issues.

Second subject up here we're going to talk about Oracle and Adobe. Their earnings have come out. I want to share my opinion and perspectives on if I like those stocks, if I don't, those sorts of things.

Oracle. Listen. The numbers are good. It's an A- minus grade here, okay? Revenue's up 30% for the company. That's a strong number and we're looking at a constant currency basis, always important to look at that, right?

Now, they did have some some problems. One is cloud and software operating expense. That was up 77%. Now, that's versus cloud, which was only, you know, only, it's still a great number, up 62%, but you're up 77% as far as your expense goes, right?

And then also, when we're looking at software, that was actually a 3% decrease. So, that was no bueno. And then hardware, that 58% growth there versus only 15% revenue growth. So, those were not good numbers and that's a big reason why I gave them an A- minus cuz of those two line items there.

Now, as far as sales and marketing, R&D, G&A, they kept all those in check very nicely. That was very impressive. They actually brought some of those down on a year-over-year basis. So, very impressive.

And then, they did have some big helps here that's it's important to understand. These are kind of like more one-offish categories. Like amortization intangible assets, you know, that was a 3% of revenue hit before, now it's down 1% and then restructuring other, that was only a 1% hit in the quarter versus 3% at the same time last year.

So, those helped the the operating expenses look much better than they would have been, okay?

So, just something to kind of keep in mind there, but operating expenses up 18%, but when your revenue's up 30%, your operating expenses up 18%, you're going to your profitability's is to explode, right?

And that's exactly what we saw. Operating income was up 57% for the company year-over-year, right?

Interest expense is also exploding, that's not good. Interest expense was up 55% for the company year-over-year. So, this company has a major debt problem. If you don't know Oracle, just understand like great income like generally great income statement, great revenue company, and even pretty great profitability company, but they got balance sheet problems.

And they just keep taking on more debt, more debt, more debt, right? And you're in a higher interest rate environment that certainly we've been in in the past 15-20 years, and so it's not ideal, right?

Interest expense alone for this latest quarter was, you know, over 1.4 billion dollars. That was 8% of their revenues. 8% of their revenues just went to trying to pay interest expense.

Not the debt down, just interest expense, ladies and gentlemen. That's a big number, and it's getting worse, and it's going to get worse before it gets better here, okay?

Now, net income grew 63% for the company on a year-over-year basis, so very strong number there, up 4.7 billion dollars. Diluted EPS a dollar 56 versus dollar 01, was that 50 plus percent growth there?

So, overall A- minus grade, pretty dang good for Oracle, but they got interest expense problems. Those interest expense problems are going to get worse. They got balance sheet problems at this company, right?

So, Oracle, I I don't mind the stock. It has a you know, a low forward P, low two-year forward P, but just understand, people are going to want to get They're They're going to only want to buy the stock at a discount because of the balance sheet problems.

And if you look at, you know, the CDS market, like it's it's not great when it comes to Oracle.

So, it's an impressive company on everything except debt and the balance sheet. And so, you know, you just got to understand this could be a money-making stock over the next five years, but if things go south here, I mean, it could get really ugly.

When we're talking about this sort of interest expense this company has to pay, the balance sheet problems at this company, it's it's severe.

So, Oracle's one of the stocks they would I buy Oracle stock? I mean, I'd be interested in buying it, but as a small position. I have to actually treat it as a risky stock, and you might not think of it as a risky stock cuz of market cap of it's a $400 billion plus dollar market cap, right?

But, I have to think of Oracle as actually buying a risky stock because of how heavy that interest expense is getting, and it's going to get a lot worse, and because of the balance sheet.