Broadcom’s VMware Acquisition: 5 Key Customer And Cost Figures To Know
From what each company spends on sales, marketing and administrative costs to R&D spending, here’s five comparable figures that all channel partners, investors and customers should know as Broadcom seeks to buy VMware for $61 billion.
Sales, Marketing, Administrative Costs: VMware’s 42% Compared To Broadcom’s 4.5%
The amount of money spent on sales, marketing and general administrative is vastly different between VMware and Broadcom.
Looking at both companies’ most recent fiscal quarter financial results, VMware spends a much larger percentage of its total revenue on sales, marketing and general administrative costs compared to Broadcom.
For its first fiscal quarter, VMware spent $1.053 billion on marketing and sales with total revenue of $3.088 billion for the quarter. Additionally, general administrative costs for VMware were $251 million.
This means VMware spent roughly 42 percent of its total revenue on marketing, sales and general administrative costs.
Meanwhile, in Broadcom’s recent second fiscal quarter, the company spent $368 million on “selling, general and administrative” costs, generating a total of $8.103 billion in revenue, according to its financial earnings report.
This means Broadcom’s selling, general and administrative costs represented about 4.5 percent of the company’s total sales—significantly less than VMware’s spending 42 percent of its total revenue on these operational costs.
Key takeaway: Broadcom plans to increase VMware’s annual profitability from $4.7 billion to $8.5 billion within the first three years of closing the deal. Broadcom said it will achieve this, in part, by
“eliminating duplicative general and administration functions across human resources, finance, legal, facilities and information technology.” It appears there could be some employee layoffs ahead for VMware.