Broadcom To Report Earnings As VMware Deal Pressure Mounts: 5 Things To Know
From how Broadcom is navigating macroeconomic pressures on sales and supplies to what is happening with the company’s protracted regulatory fight with global powers over its $61 billion buyout of VMware, here are five things analysts will be looking to hear on the company’s earnings call Thursday.
Following its earnings presentation Thursday, Broadcom Software CEO Hock Tan will be heading into a high-stakes question-and-answer period.
Analysts will want to hear how the company is navigating macroeconomic pressures on sales and supplies, as well as what is happening with the company’s protracted regulatory fight with global powers over its $61 billion buyout of VMware.
Last quarter the San Jose, Calif-based chipmaker surprised analysts with stronger-than-expected earnings of $8.93 billion, up 21 percent, as well as news that its deal with Palo Alto, Calif.-based VMware had cleared regulators in Brazil, Canada and South Africa.
Thursday’s earnings call follows news that days ago, VMware said in a U.S. Securities and Exchange Commission filing that it had pushed the “inside date”—the date to walk away from the deal—out by 90 days to May 26. On the day of the filing, the deadline was a week from expiring.
[RELATED: Broadcom, VMware Push ‘Outside Date’ To May; Close-By Date Is Unchanged]
The U.S. Federal Trade Commission has been conducting a “second request” investigation of the deal since July. The intense 30-point probe can produce thousands of pages of evidence, however, many second request investigations take 90 days to complete. The FTC’s investigation of the Broadcom-VMware deal is now in its seventh month.
Christopher Wall, HaystackID data protection officer, special counsel, global privacy and forensics, who worked as a lawyer in anti-trust and trade regulation for years before becoming a forensics investigator, has experience in the documentation process involved.
He said longer-than-expected timelines are one way to measure if a deal is in peril.
“The most obvious sign is that the parties are taking longer than normal (significantly more than 90 days or so) to substantially comply with the second request,” Wall wrote to CRN in an email. “The longer they take to comply, the more negotiations can happen with the FTC, so the length of time it takes for substantial compliance isn’t necessarily a bad sign—just that it’s more complicated than a plain vanilla deal.”
In a statement to CRN, the U.S. Federal Trade Commission declined to provide an update on the investigation.
Here are five things to know ahead of Broadcom’s earnings call.