Oracle shares rise 3% as $26 billion backlog eases debt spending fears

Oracle stock increased by 3 percent in early trading on Friday. The company reported a $26 billion jump in its revenue backlog to ease concerns about its heavy debt and spending. Roughly half of the $664 billion backlog is expected to convert into sales within the next 36 months. Oracle stated most new contracts will not require significant capital outlay, relying instead on client prepayments and customer chip supplies. This information came alongside upbeat first-quarter earnings and an improving balance sheet. However, Morningstar analyst Luke Yang noted that Oracle's cash flow profile would not change anytime soon. He warned it takes years before cloud revenue reaches a scale supporting continuous capacity expansion with positive cash flow simultaneously. The stock has fallen more than 21 percent this year compared to the S&P 500 index which rose nearly 11 percent.