Broadcom is buying VMware

[hist78]

Broadcom's intention to do more business in software industry is loud and clear. Is it a winning strategy or a distraction?

Broadcom, VMware deal could be announced by Thursday, sources say

Shares of VMware surged on reports that Broadcom is in talks to acquire the company.

www.cnbc.com

 

[Daniel Nenni]

Clearly, Hoc Tan does not want to be in the chip business. I think it is a winning strategy for Hock Tan but not for the Broadcom chip business. He could just as easily be consolidating semiconductor companies?

 

[hist78]

Clearly, Hoc Tan does not want to be in the chip business. I think it is a winning strategy for Hock Tan but not for the Broadcom chip business. He could just as easily be consolidating semiconductor companies?

Mr. Tan is probably following Warren Buffett Berkshire Hathaway model. Broadcom is gradually transforming themselves to become a conglomerate with many related or unrelated business units. Most those business units are operating independently and sending profits to Broadcom.

 

[count]

I think it's an interesting move. I don't think it's that Broadcom doesn't want to be in the semi business so much as it is that they ran out of semi companies to buy that would be large enough to move the needle but small enough not to be an anti-trust concern.

The acquisition makes sense for Broadcom's business model. Buy mature tech companies with solid franchises cut costs and cash flow. It's basically run like a P/E fund.

 

[Daniel Nenni]

• A potential Broadcom (NASDAQ:AVGO) acquisition of VMware (NYSE:VMW) is expected to see antitrust pushback, especially from other industry players who see VMware as the "Switzerland" of the data center segment.
• 
  
• Although Broadcom (AVGO) and VMware don't directly compete, technology companies from chipmakers like Intel (INTC) to cloud computing companies such as Amazon (AMZN) Web Services, work with VMware. Those companies might not want VMware, which they view as a neutral actor, to be owned by Broadcom, according to an earlier report from The Information.
• 
  
• The potential $60 billion acquisition of VMware (VMW) also comes after The Information previously reported that Broadcom is said to be investigated by the Federal Trade Commission for allegedly mistreating its chip customers.
• 
  
• It's also possible that other suitors may now be interested in VMware such as Microsoft (MSFT), Google (GOOGL) and Cisco Systems (CSCO), according to the report.

 

[hist78]

• A potential Broadcom (NASDAQ:AVGO) acquisition of VMware (NYSE:VMW) is expected to see antitrust pushback, especially from other industry players who see VMware as the "Switzerland" of the data center segment.
• 
  
• Although Broadcom (AVGO) and VMware don't directly compete, technology companies from chipmakers like Intel (INTC) to cloud computing companies such as Amazon (AMZN) Web Services, work with VMware. Those companies might not want VMware, which they view as a neutral actor, to be owned by Broadcom, according to an earlier report from The Information.
• 
  
• The potential $60 billion acquisition of VMware (VMW) also comes after The Information previously reported that Broadcom is said to be investigated by the Federal Trade Commission for allegedly mistreating its chip customers.
• 
  
• It's also possible that other suitors may now be interested in VMware such as Microsoft (MSFT), Google (GOOGL) and Cisco Systems (CSCO), according to the report.

"Although Broadcom (AVGO) and VMware don't directly compete, technology companies from chipmakers like Intel (INTC) to cloud computing companies such as Amazon (AMZN) Web Services, work with VMware. Those companies might not want VMware, which they view as a neutral actor, to be owned by Broadcom, according to an earlier report from The Information."

Is Broadcom a real competitor against Amazon or Intel?

If Intel or Amazon dares to submit this kind of opinion and the FTC uses it to block this acquisition, then no company can buy any companies anymore.

 

[blueone]

The link below has an interesting discussion, well, more like speculation, about the AVGO acquisition of VMW. I should add the caveat that I'm not a fan of the technical prowess of the author of the this article, Timothy Prickett Morgan, or TP Morgan as I like to call him, but he is very well-connected in the industry and brings up a lot of at least amusing speculation others do not.

https://www.nextplatform.com/2022/05/26/with-vmware-broadcom-has-a-real-enterprise-software-stack/

 

[Daniel Nenni]

"Broadcom is excited to share today that we have announced an agreement to acquire VMware, Inc., an iconic pioneer and innovator in enterprise software. Following the closing of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio. Together we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era. We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders."