Broadcom To Review Two VMware Business Units For 'Strategic Alternatives,' According To Leaked Email
Portfolio Pulse from Ryan Gustafson
Broadcom Inc. (NASDAQ:AVGO) is exploring 'strategic alternatives' for two VMware business units following its $69 billion acquisition of VMware. CEO Hock Tan communicated this in a leaked email, stating that the End-User Computing and Carbon Black cybersecurity units will be reviewed. Despite supporting these units during the transition, past actions by Broadcom suggest potential spin-offs or sales. Post-acquisition changes include employee layoffs and the departure of top VMware executives. Broadcom's stock saw a slight increase in after-hours trading.
November 29, 2023 | 11:02 pm
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Broadcom Inc. is reviewing strategic alternatives for VMware's End-User Computing and Carbon Black units, indicating potential future spin-offs or sales. This follows a pattern of Broadcom selling parts of acquired companies. The news comes amidst layoffs and executive departures at VMware.
The review of strategic alternatives for VMware's business units by Broadcom could lead to spin-offs or sales, which is in line with Broadcom's historical approach. However, the impact on the stock price is uncertain in the short term, as the market may have anticipated such moves following the acquisition. The slight after-hours stock increase suggests a neutral to mildly positive investor reaction, but the layoffs and executive departures could be seen as negative signals, balancing the overall short-term impact.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80