This is one of the more interesting acquisitions we have seen in years. Broadcom (formerly, and trading under the ticker symbol for Avago that purchased Broadcom) is traditionally a hardware player that is going to become a big software player overnight. This is part of the company’s shift to enterprise software after purchasing CA Technologies. It also follows a fairly predictable plan for the company’s leadership.
Broadcom Agrees to Purchase VMware
While the company is now Broadcom, it was previously Avago. Many longtime readers know that we have chronicled the business practices of Broadcom/ Avago for some time, even back to 2016 in the Business side of PLX acquisition: Impediment to NVMe everywhere. After Broadcom’s failed Qualcomm bid in 2018 due to anti-trust concerns, the company pivoted to add enterprise software. The company purchased CA Technologies and Symantec’s enterprise security business now building a software unit that VMware will fit into.
Many in the hardware industry that we cover know Broadcom-Avago’s game plan. They purchase companies like PLX that makes PCIe switches. These are usually the best components in markets with few if any competitors (Microchip is probably Broadcom’s biggest competitor in the PCIe switch space.) In these low competition markets, Broadcom raises prices and also puts heavy bundling burdens on hardware companies where supply or reasonable pricing are withheld.
This is not just done to small server makers. A great example where we saw this to the detriment of customers we saw in our An Important HPE ProLiant DL325 Gen10 Change Since Our Review piece. Here in the top center of the photo, you can see the pads and silkscreen for the “BCM5719” 1GbE NIC. On the right, you can see an Intel i350-t4 add-in NIC. This may seem confusing.
Here is the previous generation’s same area (but with the PCIe riser installed). Here you can see the NIC:
What happened to make HPE not place the designed-in Broadcom 1GbE controller is that Broadcom raised prices several fold on a fairly commoditized part for HPE servers. Quad-port 1GbE NICs are 4Gbps in an era where 200Gbps NICs were available making them the relatively low-value NICs in many servers. The value of these NICs is that Broadcom was designed into the ProLiant Gen10 line. HPE’s option at that point was to either capitulate and pay higher prices or do what we see in the above photo and move the NIC to an add-in card with an Intel controller. We strongly prefer the Intel i350 to Broadcom’s chips in this line, but that was not the point. Instead, the expansion slot had to be used for an additional add-in NIC and could not be used for higher-speed NICs. We had been deploying these servers with 40GbE dual-port NICs in this slot, and could not in this server because of the Broadcom move.
Not only was a massively increased pricing on a designed-in part an annoyance to HPE, and many of HPE’s customers, but it also meant another PCB had to be added to keep costs reasonable. Given the focus on environmental consciousness, adding another PCB is not what we would want to see. From rumors that we heard, keeping the Broadcom chip, given the pricing and HPE’s margins, would have likely meant a greater than $100 increase in price for the servers even the lower-end models that sell for $1000-$1300. This is on a relatively low-value chip. The Intel i350 at this time was in the mid-$20’s.
While this may seem like an isolated case, we have heard stories like PCIe switches getting 3x more expensive overnight post-PLX acquisition and to this day, server manufacturers often tell us about Broadcom’s heavy-handed business practices. These have happened beyond just PCIe switches and NICs and even with things like LSI controllers after that acquisition.
That is the company that is buying VMware. While we are discussing hardware lock-in due to being designed-in, VMware customers should be very cautious. Broadcom’s playbook is to push for higher pricing in its acquisitions and across its portfolio to customers that have little ability to switch, like with the NICs in the HPE server. Companies running VMware today have high switching costs, and so Broadcom likely knows that it can sell the same software and support for more without having many companies leave.
For Michael Dell and many of those that will have a liquidity event with VMware’s purchase, this is a great day. For customers of VMware, it may be worth thinking about contingencies if prices rise. Increased pricing may be fine but from the server hardware industry perspective, VMware customers should expect this under new leadership. Get ready for a big change in the industry.
Stock market news live updates: Stock turn lower following last week's rebound – Yahoo Canada
U.S. stocks closed a choppy session lower Monday, weighed down by losses in technology shares, after the major indexes failed to sustain momentum from last week’s rally.
The S&P 500 fell 0.3%, and Dow Jones Industrial Average dipped 60 points, or 0.2% after each benchmark wavered between the red and the green throughout the trading day. The Nasdaq Composite declined 0.9%.
The moves follow a sharp rebound Friday that saw the S&P 500 surge 3% during the session and over 6% for the week, its second-best week this year and its first weekly rise since late May. Still, the benchmark index is on pace for its worst opening six months since 1970.
During the previous session, the Dow rose more than 800 points, or 2.7%, while the Nasdaq increased by more than 3.3%, leading to weekly gains for the indexes of more than 5% and 7%, respectively.
Some Wall Street strategists are hopeful that markets may have found a bottom.
“As bad as [this year] has been for investors, the good news is previous years that were down at least 15% at the midway point to the year saw the final six months higher every single time, with an average return of nearly 24%,” LPL Financial chief market strategist Ryan Detrick said in a note last week.
J.P. Morgan strategist Marko Kolanovic also predicted that U.S. equities may climb as much as 7% this week as investors rebalance portfolios amid the end of the month, second quarter, and first half of the year.
While sentiment on Wall Street appears optimistic, investors are in for a bevy of key economic reports and earnings that may sway markets this week and put hopes of a comeback to the test.
Quarterly results from Nike (NKE) and Micron (MU) will be closely watched for signs of rising inventories and slowing orders like Target and some other retailers have warned about recently, which may renew worries of an economic slowdown among Corporate America.
Traders also face a fairly loaded economic calendar this week, with the latest read on core PCE inflation – the Federal Reserve’s preferred measure of consumer prices, the Conference Board’s consumer sentiment survey, and manufacturing and housing reports due out through Friday.
On the move
Robinhood Markets (HOOD)‘s stock surged 14% to close at $9.12 per share following a report from Bloomberg that cryptocurrency exchange FTX is considering a deal to acquire digital trading platform. Earlier in the day, Robinhood was in the spotlight after Goldman Sachs upgraded the brokerage to Neutral, about two months after the bank downgraded shares to Sell.
Coinbase (COIN) shares plunged nearly 10.8% to $55.96 after analysts at Goldman Sachs on Monday downgraded the cryptocurrency exchange to Sell from Neutral and slashed their price target on the stock to $45 from $70. Goldman also noted that while Coinbase recently announced it would cut 18% of staff, these layoffs will not be enough to bring the company’s costs in line with lowered sales.
AMC Entertainment (AMC) rallied to cap trading up 13.6% despite a turbulent session for the broader markets. The stock rose amid increased mentions across forums such as Reddit’s WallStreetBets and Stocktwits. AMC was also added to the Russell 1000 Index after an annual rebalancing.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Man uses Apple Airtags to find stolen Range Rover | CTV News – CTV News Toronto
An Ontario man whose car was stolen from his driveway in midtown Toronto twice in three months is revealing how he tracked and located his second vehicle.
“It’s pretty scary, but you can’t live your life in fear,” Lorne, whose surname CTV News Toronto has omitted due to safety concerns, said on Monday.
On April 1, his family moved to the Avenue Road and Lawrence Avenue area.
The following day, employees from an electronics company arrived at his house to install televisions. He placed the keys of his Range Rover Autobiography into a faraday box, which is designed to prevent criminals from copying a key fob and gaining access to a vehicle.
However, within minutes of the employees leaving his house, his car was stolen in broad daylight.
“The thieves were able to disable the tracker in my car, put there by the manufacturer,” Lorne said.
Meanwhile, his wallet, along with his kids phones, which were in the car, were thrown out of the vehicle before it was stolen, which Lorne said he believes was a preventive measure to avoid him from tracking the location of his car.
His Range Rover was never recovered.
Thirty days later, he got a new car of the same model, but this time, he placed three Apple AirTag tracking devices inside – one in the glovebox, another in his spare tire in the trunk and a third under his back seat.
While Lorne said he typically parks in his garage, last Wednesday night, he didn’t.
At 8:30 a.m. the next morning, he said his kids ran into his bedroom screaming, ”Daddy, daddy, your car is gone.”
Right away, he logged into his Find My app and located all three of his AirTags near Manville and Comsock roads in Scarborough, listed as a metal recycling plant.
After dropping his kids at school, he headed to that location and called the police. With no success reaching an officer, he drove to the 41 Division police station.
Toronto police spokesperson David Hopkinson confirmed to CTV News Toronto that a report of this nature was received by police on Thursday.
“I pressed my panic button and you heard it going off,” Lorne said. “The next day I was told they recovered nine cars.”
Due to an ongoing investigation, police could not comment further on the incident.
This time, however, Lorne said police recovered his vehicle and he anticipates it should be back in his possession soon.
While he said his AirTags worked in this case, he anticipates car thefts will only get increasingly sophisticated.
“It’s not foolproof,” he said.
Company buying Trump's social media app faces subpoenas – Yahoo Canada Finance
NEW YORK (AP) — The company planning to buy Donald Trump’s new social media business has disclosed a federal grand jury investigation that it says could impede or even prevent its acquisition of the Truth Social app.
Shares of Digital World Acquisition Corp. dropped almost 10% Monday as the company revealed that it has received subpoenas from a grand jury in New York.
The Justice Department subpoenas follow an ongoing probe by the Securities and Exchange Commission into whether Digital World broke rules by having substantial talks about buying Trump’s company starting early last year before Digital World sold stock to the public for the first time in September, just weeks before its announcement that it would be buying Trump’s company.
Trump’s social media venture launched in February as he seeks a new digital stage to rally his supporters and fight Big Tech limits on speech, a year after he was banned from Twitter, Facebook and YouTube.
The Trump Media & Technology Group — which operates the Truth Social app and was in the process of being acquired by Digital World — said in a statement that it will cooperate with “oversight that supports the SEC’s important mission of protecting retail investors.”
The new probe could make it more difficult for Trump to finance his social media company. The company last year got promises from dozens of investors to pump $1 billion into the company, but it can’t get the cash until the Digital World acquisition is completed.
Stock in Digital World rocketed to more than $100 in October after its deal to buy Trump’s company was announced. The stock closed at $25.16 Monday.
Digital World is a special-purpose acquisition company, or SPAC, part of an investing phenomenon that exploded in popularity over the past two years.
Such “blank-check” companies are empty corporate entities with no operations, only offering investors the promise they will buy a business in the future. As such they are allowed to sell stock to the public quickly without the usual regulatory disclosures and delays, but only if they haven’t already lined up possible acquisition targets.
Digital World said in a regulatory filing Monday that each member of its board of directors has been subpoenaed by the grand jury in the Southern District of New York. Both the grand jury and the SEC are also seeking a number of documents tied to the company and others including a sponsor, ARC Global Investments, and Miami-based venture capital firm Rocket One Capital.
Some of the sought documents involve “due diligence” regarding Trump Media and other potential acquisition targets, as well as communications with Digital World’s underwriter and financial adviser in its initial public offering, according to the SEC disclosure.
Digital World also Monday announced the resignation of one of its board members, Bruce Garelick, a chief strategy officer at Rocket One.
The Associated Press
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