Virtualization mavens would add cloud clout to semiconductor maker’s portfolio
Semiconductor maker Broadcom and virtualization pioneer VMware are in acquisition talks, according to reports. Separate reports from Reuters and Bloomberg News cite people familiar with the matter who confirmed that the companies are in talks. A deal is not immediate, terms are in discussion and and the talks are ongoing, according to the sources.
Broadcom makes semiconductors; VMware’s big in cloud computing and virtualization. So where’s the value in this for Broadcom? While the majority of Broadcom’s revenue comes from chips, its enterprise software sales alone topped $7 billion in 2021. Broadcom’s two most recent enterprise software acquisitions include CA Technologies and Symantec’s enterprise security business, deals it made in 2018 and 2019 respectively.
While VMware got started around the turn of the millennium, it’s come into its own gradually first as a purveyor of Virtual Machine (VM) technology then as a cloud solutions provider. In 2019 VMware moved to support containerized cloud app workloads via Kubernetes clusters and since the the company has accelerated cloud computing efforts. VMware has moved to meet the burgeoning enterprise demand for seamliness hybrid cloud and multi-cloud deployments. VMware supports all major public cloud vendors and has partnerships with many others across the globe.
It was only last November that VMware spun off from Dell. Michael Dell and equity partner Silver Lake own a majority stake in the company. The company is valued at about $40 billion. VMware reported $12.85 billion for FY2022, up 9% year over year. VMware reported $1.82 billion in GAAP net income for FY2022. Revenue from subscription licenses and Software as a Service (SaaS) was a bright point on the company’s annual balance sheet — up $6.33 billion, a 13% year-over-year increase.
VMware CEO Raghu Raghuram said the company’s fourth quarter results indicated the strong growth of the company’s multi-cloud solutions, driven by continued enterprise cloud transformation efforts.
“The growth in customer demand for our multi-cloud solutions was reflected in our Q4 results. We are at an exciting time in our industry, as enterprises large and small transform and modernize to become software-based, digital enterprises,” he said.
VMware has made many inroads to telecom since introducing its 5G Telco Cloud Platform in 2020. The company is also guiding Radio Access Network (RAN) disaggregation efforts with Telco Cloud Platform RAN in 2021.
“As a standalone company, we now have the flexibility to partner even more deeply with all cloud and on-premises infrastructure companies to create a better foundation that drives results for our customers. And the increased flexibility we will have to use equity to complete future acquisitions will help us remain competitive,” said Raghuram, at the time.
