New Broadcom Debt Financing to Pay for Not-Yet-Approved VMware Buy
Plus, AWS CEO’s windfall, Oracle Cloud news, and gen AI updates at IBM, Microsoft, Deloitte, Google Cloud.
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Broadcom must be feeling confident that it will soon secure all the necessary regulatory approvals to complete its intended, $61 billion purchase of VMware.
This week, Broadcom filed a report with the U.S. Securities and Exchange Commission that showed it has landed new debt commitments to pay for the acquisition, announced last year. Bank of America is providing the money. Broadcom can borrow up to $28.4 billion.
Broadcom noted that the financing is split three ways: two $10.7 billion term loans and one $7 billion term loan. They replace a $32 billion bridge loan Broadcom got in 2022 to pay for VMware.
But since the last main regulatory holdout, the U.S. Federal Trade Commission. has yet to approve the VMware buy, Broadcom executives likely felt pressure to switch strategic funding gears. (The FTC supposedly held a closed-door meeting earlier this week about Broadcom-VMware. What that led to remains unknown.)
Bloomberg noted that the new deal with Bank of America gives Broadcom more time to decide when to turn to a different debt market for more cash. The advantage to this approach “is the flexibility in securing committed term bank financings with the ability to wait out bond markets until conditions are favorable,” Nicholas Elfner, co-head of research at Breckinridge Capital Advisors, told Bloomberg.
The new term loans will mature in two, three and five years, rather than in 12-18 months for the bridge loan. By then, especially if interest rates come down, Broadcom may replace its Bank of America debt, industry experts told Bloomberg.
Up next, we look at what the head of AWS just did to increase his personal wealth.
Adam Selipsky is a much richer man this week.
According to SEC filings, the CEO of Amazon Web Services cashed in 70,556 shares of his Amazon stock, for a total of $9.9 million.
Earlier this year, Channel Futures reported that Amazon had granted Selipsky more stock compensation. The e-commerce giant cited the following reasons for that increase:
• Selipsky contributed to AWS’ increase in net sales between the end of 2020 and 2021, by about $14 billion.
• He also played a role in raising AWS’ operating income by about $4 billion over that same period.
• He oversaw the expansion of AWS to 84 data center regions (what the company calls “Availability Zones”) during that same time frame.
• He intends to open 24 more Availability Zones.
• He helped secure more customers.
• He was part of launching “numerous” new AWS services.
Plus, Amazon said Selipsky’s level of responsibility “relative to compensation for senior executives of comparably sized businesses at peer companies, including that the size of operations he manages, is equivalent to those managed by chief executive officers of many other Fortune 100 companies.”
On the next slide, we transition from cloud providers and money to cloud providers and government contracts.
In not-so-secret news, Oracle now holds top-secret clearance so it can deliver cloud infrastructure and services to extremely private federal agencies in the United States.
Oracle made the announcement on Aug. 15.
The classification gives Oracle permission to provision Oracle Cloud Infrastructure to the U.S. Department of Defense and what it generally referred to as the “Intelligence Community” (one can make “Jack Ryan”-level inferences from there). Its new clearance applies to the most closely guarded workloads as well as unclassified and what the government calls “controlled unclassified information.”
“Oracle is proud to bring our next-generation cloud services to bear against their most important work,” said Kim Lynch, executive vice president, government defense and intelligence at Oracle. “This latest authorization reinforces our commitment to accelerating our nation’s decision advantage to protect and advance our country.”
Along those lines, the Pentagon’s revamped cloud computing contract is making significant progress.
Speaking of the DoD, its Joint Warfighting Cloud Capability project has made more headway than the controversial and ultimately kiboshed Joint Enterprise Defense Initiative ever did.
Less than a year after the feds revamped JEDI into JWCC, the Pentagon has shelled out hundreds of millions of dollars for more than a dozen orders. That news comes from SiliconAngle, which reported on a conference this week in Georgia where the director of the Defense Information Systems Agency spoke. According to SiliconAngle, U.S. Air Force Lt. Gen. Robert Skinner said that JWCC has fielded 13 “cloud task orders” worth more than $200 million over the life of the contract. Another 13 are in the works, the outlet reported.
“A whole bunch of different organizations are leveraging JWCC to date,” Skinner said, per SiliconAngle.
Last December, the Pentagon named the big four hyperscalers — AWS, Microsoft Azure, Google Cloud and Oracle Cloud — as JWCC’s providers. That outcome marked a significant shift from JEDI, which was to go to a single-vendor (the key factor that sparked prolonged court battles and led to the feds scrapping JEDI and starting over with JWCC).
Skinner did not say which of the four cloud vendors has so far secured the orders.
JWCC could be worth $9 billion — a little less than the original amount of JEDI — over its 10-year lifetime.
OK, time to once again change topics. On these last two slides, generative AI (because, what else?) steals the spotlight.
IBM Consulting and Microsoft are teaming up on generative AI.
The behemoth companies will deliver their combined capabilities to joint customers through the new IBM Consulting Azure OpenAI Service. It’s available on the Azure Marketplace.
Positioned as a fully managed AI service that lets developers and data scientists apply large language models, the service helps businesses define an adoption strategy and an initial set of use cases. So far those applications include procurement, content generation and the streamlining of health care processes.
“Businesses are looking for responsible ways to adopt and integrate multi-model generative AI solutions that augment the work their teams are doing in areas such as creative content and code creation, content summarization and search,” said Francesco Brenna, global vice president and senior partner of the Microsoft Practice at IBM Consulting. “Our work with Microsoft is another example of IBM’s open ecosystem model designed to bring value to clients while helping them responsibly build and scale generative AI across their businesses.”
The new collaboration effort also means enterprises get access to IBM Consulting experts. That roster includes 21,000 data, AI and experience consultants.
This week’s IBM-Microsoft news comes not long after IBM Consulting recently launched its Center of Excellence for generative AI.
Finally, check out what Deloitte and Google Cloud are up to as of this week.
The generative AI deals are nonstop these days. The next one that cropped up this week comes courtesy of consulting giant Deloitte and the world’s third-largest public cloud provider, Google Cloud.
Deloitte has made its ConvergeConsumer portfolio available on Google Cloud, and integrated it with Google Cloud’s data analytics, AI and generative AI capabilities. Altogether, organizations get turnkey tools that fuel initiatives with AI assistance (yes, that means taking over much of the responsibilities data scientists and engineers have been handling). Think demand forecasting, marketing campaign personalization, product-pricing optimization and more, the companies said.
“ConvergeConsumer is about helping companies deliver outcomes and quickly engineer advantage by moving their decision-making and experiences from mass to micro at scale,” said Ben Stiller, ConvergeCONSUMER general manager and principal at Deloitte Consulting LLP. “By combining Google Cloud’s advanced generative AI, data analytics and cloud technologies with Deloitte’s IP, deep industry/domain knowledge, expansive set of customer signals and engineering capabilities, we are ushering in a new era of customer centricity that can have dramatic commercial, operational and financial benefits for our clients.”
This week’s announcement represents an extension of the work Deloitte and Google Cloud have been doing together for several years.
The generative AI deals are nonstop these days. The next one that cropped up this week comes courtesy of consulting giant Deloitte and the world’s third-largest public cloud provider, Google Cloud.
Deloitte has made its ConvergeConsumer portfolio available on Google Cloud, and integrated it with Google Cloud’s data analytics, AI and generative AI capabilities. Altogether, organizations get turnkey tools that fuel initiatives with AI assistance (yes, that means taking over much of the responsibilities data scientists and engineers have been handling). Think demand forecasting, marketing campaign personalization, product-pricing optimization and more, the companies said.
“ConvergeConsumer is about helping companies deliver outcomes and quickly engineer advantage by moving their decision-making and experiences from mass to micro at scale,” said Ben Stiller, ConvergeCONSUMER general manager and principal at Deloitte Consulting LLP. “By combining Google Cloud’s advanced generative AI, data analytics and cloud technologies with Deloitte’s IP, deep industry/domain knowledge, expansive set of customer signals and engineering capabilities, we are ushering in a new era of customer centricity that can have dramatic commercial, operational and financial benefits for our clients.”
This week’s announcement represents an extension of the work Deloitte and Google Cloud have been doing together for several years.
If you’re looking for juicy cloud computing news, look no further. This week, big names are hogging the spotlight. Let’s start with Broadcom debt financing.
As the chipmaker with a $341 billion market cap hopes to wrap up the pending, $61 billion VMware purchase, it’s thinking about how to pay for that acquisition. (It’s also rumored to be planning a lot of layoffs as a result.) Executives apparently were a little under the gun because money they’d already secured for VMware was set to come due soon. So, for Broadcom, debt financing looks like the best option. We cover that in the very first installment in the slideshow above.
But stick around. You’ll want to find out what’s going on with Amazon Web Services CEO Adam Selipsky. Our guess is he’s going into the weekend with a little (or, actually, let’s be honest, probably very big) champagne celebration.
Beyond Broadcom Debt Financing: Pentagon Developments
Once you’ve got the lowdown on Broadcom debt financing and Selipsky’s windfall, we move over to significant developments at the Pentagon. First up, Oracle Cloud now holds the highest of clearances. We cover what that means and which agencies the world’s fourth-largest cloud provider will serve. After that, we revisit the Department of Defense’s JWCC. Remember JWCC? Well, let’s just say that contract has made more progress than the now-defunct JEDI ever did. And at least one of the four vendors eligible to field orders (AWS, Microsoft Azure, Google Cloud and Oracle Cloud) is having a JWCC heyday.
Finally, we round out this roundup with some generative AI partnerships between huge consultancies and providers. Because, at this point, there’s really no such thing as cloud news without mention of generative AI anymore. If you haven’t kept up on the announcements coming from IBM Consulting, Azure, Deloitte and Google Cloud, we have that all in the slideshow above.
For now, kick off this roundup of the week’s cloud computing developments by clicking above and reading about Broadcom debt financing.
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