back to article That went well – not! Broadcom’s value dives after CA biz gobble

Broadcom’s share price has dipped by nearly 14 per cent after it announced its plan to acquire CA Technologies. The $19bn deal, announced yesterday, was a bolt from the blue. It was also a major change from Broadcom’s most recent quarterly earnings statement in which executives discussed extending the company’s lead in silicon …

  1. James Anderson

    And no wonder

    CA must be the most hated software supplier in the industry.

    Not so much the place where old software goes to die. As the place where good software is worked till it dies of neglect.

    1. Gordon 10

      Re: And no wonder

      Most hated? Naaa. Surely its still Oracle?

      Good point on the rest though!

  2. Anonymous Coward
    Anonymous Coward

    And investors don’t get the deal either

    Investors DO GET THE DEAL.

    Broadcom has a mountain of debt and must demonstrate sufficient revenue flow not to breach its covenants. It is a standard practice under the circumstances to acquire various companies for their revenue alone. It is neither the first, nor the last company to do that. In fact, I can think of at least several major tech companies which have had to do that at some point.

    What investors quite clearly do not like that it needs to go this way about increasing its revenue flow.

    Even if they were as clueless as they usually are seeking alpha cracked the idea about this acquisition and posted an article with exactly this explanation on it yesterday.

    1. Anonymous Coward
      Anonymous Coward

      So you have a lot of debt, so instead of fixing the issue you buy the worlds worst software company for billions?!

      I need me some of that crack cocaine CEOs are smoking.

      1. Gordon 10

        Ironically it makes sense though. Lets say you have a mortgage and want to pay it off faster.

        One *possible* way to do that is buy another house and rent it out for a price that exceeds the costs to service the 2nd house by enough to cover off paying a bit more on the 1st mortgage.

  3. PM from Hell

    CA Bought my disk compression company

    Back in the day when I managed IBM Mainframes I used a clever disk compression technology to reduce the amount of physical DASD I required. I had been fighting CA of for several years when they acquired the company. The CA salesman then scheduled an urgent meeting to discuss the new licencing arrangements on renewal. Typically for CA he wanted to increase the licence cost 6 fold.

    I was luckily in the position to be able to point out that the price of second user dads had tanked and it was hardly worth me continuing to operate the software anymore as I now had space for another couple of rows of disks. I was in the rare position of being able to dictate terms to him, carry on with the current arrangement of an RPI increase each year and the Kudos of being able to add us to his list of sites or I would simply commission more physical DASD. The look on his face was something to behold.

    1. Salestard

      Re: CA Bought my disk compression company

      An unpleasant bunch.

      For us salestards, CA was always somewhere to avoid - like Data General, Intergris, Bull, and a number of others, it was a place only the truly psychotic seemed to thrive.

      I had an interview there seven or eight years ago, after the recruitment consultant / estate agent swore blind they'd changed, and shed the old boiler room methods and people.

      Bloke conducting the interview was unpleasant, even by the level of wankers I get to deal with. Confirmed nothing had changed when after a short monologue about every salesperson owning a Porsche*, he asks me how much I earned the previous year.

      Fed up, I told him, adding 25% for good measure.

      "Huh, I paid more than that in tax last year'

      Odious is the best word to describe that guy. I think I got bored of his posturing at that point and just took it dark, for entertainment. I think I might have hinted that I'd married my sister and had a chronic glue sniffing habit.

      *Golden rule of field sales - never, ever, turn up to a customer meeting in a car they themselves can't realistically afford. Good for you if you've got some £200k super knob extension in the garage, but expecting someone to spend money with you whilst rubbing their nose in your success isn't going to work.

  4. Steve Foster

    Spend $19bn on CA, and see your market value fall by $19bn?

    Sounds about right to me, given that it's CA we're talking about!

    The only surprise really is that the value didn't fall further...

  5. spufidoo

    How humiliating. Bought out by a chip shop.

    "Salt and vinegar, love?"

  6. tentimes


    Can anyone explain this to me. I am frowning and scratching my head but it isn't happening for me. Was there just not a big enough hole in the ground to burn money in?

    1. Anonymous Coward
      Anonymous Coward

      Re: Why?

      Large/Complex financing via debt usually comes with various strings attached. F.E. your percentage is X, but it becomes X + Y if your revenue does not grow by a certain number each year.

      You can grow that revenue naturally. Or, alternatively, you can buy a healthy source of revenue and comply with the covenant.

  7. stephanh

    it's obvious

    They are going to port all that mainframe software to the Raspberry Pi.

    1. Michael Wojcik Silver badge

      Re: it's obvious

      IoT security is an issue, but I'm not sure putting Top Secret on my set-top box is the answer.

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