- Oracle (ORCL) shares fell over 3% to $141.22 in early trading Friday as the U.S. Department of Defense canceled its $280 million over-budget HR software plan for 900,000 civilian employees, Bloomberg News reported.
- The Pentagon’s cost-cutting move, driven by Trump and Elon Musk’s efficiency push, scrapped Oracle’s 2019 initiative and Leidos Holdings’ (LDOS) $75 million support contract from 2020, leaving both companies silent and Leidos shares down 2.2%.
- Despite Oracle’s $16 billion Veterans Affairs deal and executive ties to Trump, the terminated project—six years delayed—prompts a 60-day scramble for a new HR tech plan, with $92 million budgeted for fiscal year 2025, per Bloomberg.
Oracle Corporation (ORCL) saw its shares drop over 3% to $141.22 in early trading Friday, with a 2% decline in premarket trading in New York. The slide, as reported by Bloomberg News, stems from the U.S. Department of Defense’s decision to abandon a plan to implement Oracle’s cloud HR software for its 900,000 civilian employees, a project axed amid the Pentagon’s aggressive cost-cutting measures. Defense Secretary Pete Hegseth, in a memo cited by Bloomberg last week, described the initiative – six years behind schedule and $280 million over budget – as a financial sinkhole, arguing that further funding would waste taxpayer dollars. The Pentagon now faces a 60-day deadline to devise a new HR technology plan, leaving Oracle and its partner Leidos Holdings Inc. (LDOS), whose $75 million support contract from 2020 is also affected, sidelined.
Bloomberg identified Oracle and Leidos through contract searches, noting the Pentagon’s silence despite repeated inquiries. Leidos shares fell more than 2% hitting an intraday low of $132.80, and neither company commented. Originally tapped in 2019, Oracle’s software aimed to modernize the Pentagon’s aging HR systems, a need Hegseth acknowledged remains critical. The cancellation contrasts with Oracle’s robust federal ties, including a $16 billion Veterans Affairs deal, and its leadership’s connections to the Trump administration-Chairman Larry Ellison, a Trump donor linked to Elon Musk, and CEO Safra Catz, a former transition team member. With Trump and Musk’s Department of Government Efficiency pushing tech modernization alongside spending cuts, software vendors face uncertainty. Maintaining the current HR system and the now-defunct project was set to cost $92 million in fiscal year 2025, per Bloomberg’s report, underscoring the stakes as Oracle navigates this setback.
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