Everything Broadcom CEO Hock Tan Has Said About The VMware Deal
The road To VMware’s future might go through Broadcom CEO Hock Tan. Here is what he has said so far about what lies ahead for the software virtualization powerhouse.
June 7, Interview with Jim Cramer on CNBC’s Mad Money
Cramer: Hock, Congratulations. This deal, I think is the capstone. Tell us about what will make your business 50 percent software, because that’s so exciting to so many of us who appreciate the growth that you’ve always had?
Right. And we think it’s a great asset and it’s a great acquisition for us. It’s very incredibly aligned with our strategy of building the leading provider of infrastructure technology globally. And this acquisition has all the attributes we see. They are the leader in the big and growing global markets, blue chip customers, and they have incredible talent of engineers, very innovation-centric culture, which is exactly what Broadcom is all about.
Now, do you think there’s enough overlap with VMware and your current Broadcom salespeople that you’ll be able to make it so that the channel you’ll be able to offer both hardware and software – can that work?
It’s largely software. Largely software. Because our hardware tends to be sold through systems integrator OEMs. But software, absolutely. Combined with Broadcom existing software portfolio, we’ll create a uniquely powerful value proposition to our enterprise customers, one that will enable them to effectively develop, run, manage their applications seamlessly, securely, across from on-prem, private cloud to multi-cloud.
Now, one of the things I’ve been saying on Mad Money is we’re looking for companies that make things, do stuff, that reward shareholders and have a reasonably priced stock. Hock, I’ve got to tell you, in the same breath of buying VMware, you immediately talked about what you were going to do for existing shareholders. Why can’t others out here see what you do in terms of your regularization that the shareholders own the company?
Well, you know, we never lose sight of this focus. One is that we’re there for customers. We’re there to make sure employees have great opportunities and succeed. But equally, we’re there to deliver consistent compelling value to our shareholders. They are a big part of the reason we exist.
And you immediately talked about buyback, that dividend is a very positive division of cash flow. People again, out here, Hock they don’t think like that. Why do you recognize that to build that stable, stable group of shareholders allows you to do these great deals, and then you do them accretively, it’s not a waste of their money.
Absolutely not. In fact, the way we think about why we issue dividends, even as we keep on the strategy of acquiring great assets, it’s simply that we feel while relying on our shareholders to think of us as a long-term investment, as a long-term play, we feel that we are rewarding them as we progress, as we advance. Which is why we save, we put aside half of free cash flow as a return of dividends, and the other half in return, they let us keep to do the next deal and grow the business.
All right, well, my colleague David Faber said you must ask Hock if he’s out of deals. Now he’s buying companies as big as VMware, is there anyone left?
Oh I’m sure there will be, but I’m focused on one deal at a time, and this is it, VMware.