Cloud News

VMware Deal ‘Making Good Progress’: Broadcom CEO

O’Ryan Johnson

“As far as the regulatory process around VMware goes, we’re in the thick of it,” said Broadcom CEO Hock Tan. “It’s making good progress. Just to reiterate, we expect to close on this in fiscal 2023.”


Broadcom CEO Hock Tan said the company is now talking with business regulators in “a couple of jurisdictions” and is making “good progress” as it seeks approvals for its blockbuster $61 billion purchase of VMware, which Broadcom announced in May.

“As far as the regulatory process around VMware goes, we’re in the thick of it,” Tan (pictured) said in response to a question during the company’s quarterly financial earnings call. “It’s making good progress. Just to reiterate, we expect to close on this in fiscal 2023.”

Over the years, Broadcom has sparred with regulators in the US and Europe, signing agreements in both regions to stop anti-competitive practices both regions have called “illegal” in order to avoid legal woes. Now the company needs regulators to agree to its purchase of the virtualization software giant VMware.

[Related: VMware ‘Channel Champion’ Bill Swales Departs For Lenovo]

“We’re making good progress with our regulatory filings around the world, with an excellent team effort on this and we’re moving forward very much as expected in this regard,” Tan said.

The Financial Times reported in June that the European Commission, the European Union’s executive body, was preparing to take a more serious “Phase 2” look at Broadcom’s $61 billion takeover of VMware which is expected to close by October 2023.

Such a move would signal that regulators are digging into the deal, which might add months to the approval process. As of Friday, the European Commission had not announced such a probe on its website.

Broadcom Q3 Earnings Results

Broadcom unveiled the results of its third fiscal quarter on Thursday, reporting record revenue of $8.46 billion in revenue for 25 percent year-over-year sales growth. Net income for the quarter rose to $3.07 billion, up $1.19 billion from a year ago, and earnings per share of $7.15. Broadcom is paying dividends of $4.10 per share.

The company said it returned a total of $3.2 billion in cash to shareholders this quarter through $1.7 billion in dividends and $1.5 billion in share repurchases.

The company’s third quarter earnings results caused shares of Broadcom to rise sharply in after-hours trading. Broadcom’s stock is up 4 percent as of Friday morning, trading at $511.98 per share.

Broadcom Chip Demand

Analysts seemed surprised by Tan’s remarks about demand Broadcom saw for its chips during the quarter, asking how Broadcom has avoided the slowdowns that have hamstrung the rest of the semiconductor industry.

“It’s really hard for investors, and even myself, to reconcile the fact that everything is fine for you, despite the fact that the macro data points are worsening for many of your peers,” said Ross Seymore, managing director of semiconductor equity research with Deutsche Bank.

Tan said the company was simply meeting the “true end-demand” that was in the market.

“The short answer is no,” Tan said. “This is something we’ve been talking about in earnings calls and on analyst calls. What we are calling ‘true end-demand.’ What we are measuring, what we are reporting, revenues is -- and we’ve been looking at it for the last eight quarters, we scrubbed through our backlog, thoughtfully, carefully, before we deliver to customers – true end-demand.”

Tan added, “What we reported to you today and you see in the numbers we’re presenting, and the strength of the numbers, if I do say so myself, that is true end-demand. We also have a ton of backlog and our lead time remains unchanged at 50 weeks.”

The company’s order backlog increased to $31 billion this quarter.

Tan conceded the backlog is growing, although he said revenues are rising and the company doesn’t allow order cancelations for backlog issues.

Another analyst followed up by asking Tan “how much confidence” investors can have in the demand numbers and if he thought “customers are gaming you?”

“We put in a lot of checks and balances hugely before we put products out on trucks to our customers and we have been doing this now for two years and we’re pretty good at doing it,” Tan said. “No, we don’t see that.”

O’Ryan Johnson

O’Ryan Johnson is a veteran news reporter. He covers the data center beat for CRN and hopes to hear from channel partners about how he can improve his coverage and write the stories they want to read. He can be reached at

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