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May 23, 2022, 7:58 a.m. EDT

Broadcom reportedly in talks to buy VMware

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By Mike Murphy

Chip maker Broadcom Inc. is in negotiations to buy enterprise cloud-computing company VMware Inc., according to multiple reports Sunday night.

Bloomberg News , Reuters , the New York Times and the Wall Street Journal reported the ongoing talks but did not mention a purchase price; as of Friday, VMware /zigman2/quotes/209864107/composite VMW +0.07% had a market cap of about $40.3 billion, while Broadcom was valued at about $222 billion.

The reports said said talks are ongoing, and it’s possible no deal will be reached.

San Jose, Calif.-based Broadcom /zigman2/quotes/200646538/composite AVGO -1.64% has reportedly been seeking a major software acquisition for some time; its last major deal was the nearly $11 billion purchase of Symantec Corp.’s enterprise security business in 2019 . Broadcom bought Brocade Communications in 2016 for $5.9 billion and CA Inc. in 2018 for about $18 billion.

“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy,” Broadcom Chief Executive Hock Tan said after the Symantec deal in 2019.

Broadcom topped Wall Street’s estimates whe n it reported fiscal first-quarter earnings in March . The company is scheduled to report second-quarter earnings June 2.

Last year, Dell Technologies Inc. /zigman2/quotes/203822527/composite DELL -7.51% finally spun off its majority stake in VMware . In its last earnings report in February, Palo Alto, Calif.-based VMware beat earnings expectations but lowered its outlook for the current quarter. It is scheduled to report first-quarter earnings on Thursday.

Broadcom shares are down 18% year to date, while VMware is down 17%, roughly in line with the S&P 500’s /zigman2/quotes/210599714/realtime SPX +1.06% 18% decline this year.

/zigman2/quotes/209864107/composite
US : U.S.: NYSE
$ 114.06
+0.08 +0.07%
Volume: 653,811
July 1, 2022 4:00p
P/E Ratio
29.45
Dividend Yield
N/A
Market Cap
$48.07 billion
Rev. per Employee
$345,200
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/zigman2/quotes/200646538/composite
US : U.S.: Nasdaq
$ 477.84
-7.97 -1.64%
Volume: 2.13M
July 1, 2022 4:00p
P/E Ratio
23.69
Dividend Yield
3.43%
Market Cap
$192.96 billion
Rev. per Employee
$1.50M
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/zigman2/quotes/203822527/composite
US : U.S.: NYSE
$ 42.74
-3.47 -7.51%
Volume: 6.38M
July 1, 2022 4:00p
P/E Ratio
5.85
Dividend Yield
N/A
Market Cap
$31.61 billion
Rev. per Employee
$814,391
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/zigman2/quotes/210599714/realtime
US : S&P US
3,825.33
+39.95 +1.06%
Volume: 2.20B
July 1, 2022 5:45p
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