June 10, 2022
Photo by Brian Kostiuk on Unsplash
Hello and welcome to Protocol Enterprise! Today: why AMD’s plan to offer a custom silicon service could help it achieve big revenue goals, how VMware sold the Broadcom deal internally, and why Upstart could face possible regulation after years with a get-out-of-D.C.-free card.
AMD’s first financial analyst day in two years was a flex. Executives forecast that the company would double its annual revenue by 2025 — a number that Wall Street will remember.
The largely paint-by-numbers affair (“These things were a lot more fun when AMD was in big trouble,” one of the attendees quipped) involved four hours of presentations by most of the chipmaker’s executive bench. AMD is now aiming to snatch a $40 billion piece of what it sees as $300 billion worth of opportunity within three years.
Beyond AMD’s grand strategy — the not-so-novel approach of going after the data center market, because there’s lots of money there! — is something intriguing: AMD’s custom chip design business.
It makes a ton of sense.
Fewer than half of executives (44%) see better communication with customers as a benefit of digitizing AR. Meanwhile, 72% state that their AR department isn't customer-oriented enough, implying that executives understand the need for customer-oriented AR departments, but aren't aware that they can close that gap as part of their AR digitization project.
A new regulatory filing revealed that VMware perhaps expected some employee backlash about chipmaker Broadcom’s proposed $61 billion acquisition of the virtualization and cloud computing software provider.
In an additional proxy filing yesterday with the SEC, VMware outlined answers to anticipated questions about the deal, which came just seven months after it spun off from Dell Technologies. Two of the entries sought to defend why VMware backtracked on the value of being an independent company: “You sold me on the advantages of being an independent public company. Why aren’t we staying the course?” and “You said being an independent company was the best path forward for VMware. How do you square that with this announcement?”
In short, VMware said that Broadcom’s unsolicited offer included a significant premium for shareholders, that Broadcom sees broad value in the VMware portfolio and multicloud work and that Broadcom’s focus on “solving complex IT infrastructure problems” complemented VMware’s role as “the trusted foundation to accelerate innovation.”
“[T]ogether with Broadcom, VMware will be even better positioned to deliver valuable solutions to even more of the world’s largest enterprises, with a continued focus on technology innovation,” the filing stated. “Broadcom will invest in VMware to help us continue to grow a robust ecosystem across all cloud and on-premises infrastructure vendors, as well as new partnership opportunities. This is a landmark moment for VMware.”
VMware also saw the need to outline why it characterizes Broadcom as innovative.
“Their broad portfolio addresses customer problems in a way to help increase efficiency and reallocate resources to move fast and scale their business to new opportunities,” the filing states. “And their R&D investments reflect this, with R&D investments totaling $4.9 billion in their latest fiscal year, 24x their FY2009 spend. Broadcom’s solid vision, coupled with their strong R&D investment and capabilities, continues to move the industry forward, at scale.”
The Consumer Financial Protection Bureau wants to protect people from opaque lending decisions that block them from fair access to credit. Its latest move: The CFPB told fintech AI company Upstart it now has to give the agency details on changes it plans to make to its machine-learning model or face enforcement action under the Equal Credit Opportunity Act.
“Companies are not absolved of their legal responsibilities when they let a black-box model make lending decisions,” said CFPB Director Rohit Chopra in May.
Upstart embeds its “AI-powered Credit Decision API” into loan partner apps. Under pressure from the agency, the company agreed in 2017 to be part of a compliance program shielding it from possible enforcement.
The program required Upstart to obtain an independent assessment of its ML underwriting and pricing model. Upstart had to show how its automated ML model matched up against a traditional credit model — the non-AI kind. The CFPB wanted to know whether it provided better access to credit and fairer lending.
Under that system, Upstart would have to get its would-be model change evaluated if it wanted to remain shielded through the program. But Upstart didn’t want to wait, so it asked to exit the program. The CFPB obliged, which exposes it to possible enforcement.
So what’s the upshot on Upstart? Financial services companies have to keep track of AI/ML model data, outputs and how the models made decisions — something companies like Capital One sweat over. Expect financial services companies to continue investing in data governance, AI/ML model monitoring tech and data storage to keep track of model outputs in case regulators come knocking.
Larry Ellison said that Oracle will seek to offer a national health records database in the wake of its acquisition of Cerner, keeping alive the dream of many a mid-2000s enterprise tech company unaware this is way harder than it sounds.
A resounding 96% of respondents claimed that there is work to do in digitizing their AR departments, yet 60% agreed that their AR departments haven’t been prioritized as much as other departments for digitization. At a time when the importance of securing cash flow is higher than ever, many businesses are not putting enough focus on it.
Thanks for reading — see you Monday!