Independence Day ruminations

I just came off a two-week vacation, and facing a short week with low attention spans, I decided to try something a little different for this week’s ForwardThinking. Rather than dig deep into something I was thinking about, I would follow in the tradition of Dan Shaughnessy, the long-time sports columnist at the Boston Globe, who regularly writes columns with his random thoughts about the latest news.

So in Dan’s inimitable style: picked-up enterprise tech news pieces while unpacking my bags and returning to reality:

* You may recall that earlier this year, shortly after the new administration moved in, the Justice Department sued to stop last year’s $14 billion HPE-Juniper Networks deal. It was a bit of a shock, considering this group was expected to be more friendly when it came to big M&A than its predecessors.

I wrote a piece after speaking to some analysts, who expressed skepticism about the DOJ’s arguments that the deal was anticompetitive. The two companies involved certainly didn’t agree with the DOJ’s assertion, calling it “fundamentally flawed.” Regardless, the suit proceeded, until this week, that is.

That’s correct, the parties came to a meeting of the minds announced this week. Reuters reports that under the terms of the agreement, HP must “divest HPE's Instant On wireless networking business and license the source code for Juniper's Mist AI software used in Juniper's WLAN (Wireless Local Area Network) products.” Seems like a reasonable compromise, preserving competition and open markets, while allowing the companies to finally move on and close the deal, pending court approval.

As Ray Wang, founder and principal analyst at Constellation Research told me, “WLAN is quite a commoditized market and if this is what’s needed to focus on the prize in AI, it’s a small price to pay.”

* By any measure Microsoft is one of the most successful companies around. The company's market cap was $3.68 trillion as of Thursday morning, placing it second in the world in that category behind only Nvidia. In its most recent quarterly earnings report, it reported $70 billion in revenue, up 13% year-over-year. It posted $96 billion in annual profits last year. I could continue, but I think you get the idea. It’s a wealthy and successful organization. That’s why it’s even more surprising that the software giant announced it was laying off 9000 employees this week, per CNBC.

This comes after another 6000-person layoff in May, and as Jordan Novet from CNBC notes, it’s the biggest single year layoff at Microsoft since 2014 when the company laid off 18,000 after acquiring Nokia. The difference is that the company isn’t combining entities, dealing with an external crisis or facing a business downturn. On the contrary, it’s wildly successful while laying off thousands of employees anyway.

Microsoft can do whatever it wants, of course, but laying off 15,000 people while putting up those numbers might not be the best look. Regardless, 9000 humans just lost their jobs today and that sucks any way you look at it.

* Oracle has always struggled in the cloud infrastructure market. As hard as it has tried to change that, it has remained mired in low, single-digit market share, per Synergy Research, the cloud research company I most often quote.  But the tide could finally be turning for the database giant.

That’s because in a filing earlier this week from CEO Safra Catz, the company indicated that it has had some major cloud wins of late including a whopping $30 billion annual contract with a yet unnamed company for Oracle’s cloud services. That contract is scheduled to start in 2028, three years hence, so a lot could happen between now and then. But it’s a big number, right?

You have every reason to be skeptical until you hear more of the details, but just yesterday, Bloomberg reported it could be part of the big Stargate-OpenAI deal to spend billions on data center technology in the coming years. If reports are true, it could potentially finally move the market share needle a bit for the company, not into Amazon-Microsoft-Google territory, but perhaps closer to the top of the second tier of companies in cloud market share.

* Finally, I walked by a Tesla dealer while on vacation and was surprised to see zero percent financing deals. Maybe I shouldn’t have been. The company announced its latest quarterly car numbers this week and they were pretty abysmal, down 13.5% over the previous year. 

That’s the biggest quarterly drop ever for the electric car maker, per Rani Moller at Sherwood. Yet, in spite of that bombshell of a report, Tesla stock was up over 5% yesterday morning. As Dan Shaughnessy often notes cynically, “swell.”

On that note, go off and enjoy yourselves this holiday weekend, stay safe, and we will pick this all up again next week. 

Featured photo by DESIGNECOLOGIST on Unsplash