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business Friday 27 May 2022
Big tech deals keep coming: Broadcom buys VMware for $61B

By MICHELLE CHAPMAN AP includes $8 billion of VM-
Business Writer ware net debt.
Computer chip and soft- Under the proposed offer,
ware maker Broadcom will VMware shareholders can
spend about $61 billion to choose to receive either
acquire the cloud tech- $142.50 in cash or 0.2520
nology company VMware, shares of Broadcom com-
one of the biggest deals mon stock for each VM-
of the year despite an en- ware share.
vironment of rising inflation VMware is already among
and economic uncertainty. the moving parts of the
The proposed deal comes tech sector this year, with
just weeks after billionaire Dell Technologies Inc. spin-
and Tesla CEO Elon Musk ning off its 81% equity stake
offered to spend $44 billion in company only about 6
on Twitter and it is second months ago. Michael Dell
in size this year only to Mi- is still VMware's chairman
crosoft's nearly $70 billion and he owns 40.2% of the
acquisition of Activision Bliz- company's outstanding
zard, the maker of Candy shares.
Crush and Call of Duty. "If Broadcom plans to en-
The massive buyouts are ter the enterprise soft-
occurring at a time of The Exterior view of VMware headquarters in Palo Alto, Calif., Wednesday, Oct. 24, 2007. ware market it could be
heightened anxiety be- Associated Press a boon into a new area
cause of turmoil on the that it doesn't have much
global supply chain, war spending. for about $19 billion the Broadcom's infrastructure presence for outside of
in Europe and rising prices With the perceived value previous year. software solutions address CA Technologies," wrote
that have the potential of tech companies on the Broadcom wants to estab- different but important Tracy Woo, senior analyst
to cool both business and decline, at least for now, lish a stronger foothold in enterprise needs, and the with Forrester Research. "It
consumer activity. more buyouts could be the cloud computing mar- combined company will could extract some func-
But that uncertainty has on the way with targeted ket and VMware's technol- be able to serve them more tionality from VMware's
also created opportunities companies appearing rel- ogy allows large corpora- effectively and securely," portfolio to pad CA's prod-
for companies like Broad- atively cheap. tions to blend public cloud Tom Krause, president of uct capabilities." Dell and
com. The tech-heavy Nas- And Broadcom CEO Hock access with internal com- the Broadcom Software Silver Lake, which owns 10%
daq has tumbled more Tan has been among the pany networks. VMware Group, said in a prepared of VMware's outstanding
than 26% this year. most aggressive buyers, has close relations with ev- statement Thursday. stock, have signed sup-
In one day this week, so- building out the company ery major cloud company The Broadcom Software port agreements to vote
cial media companies had with big acquisitions in re- and provider, including Group will rebrand and in favor of the transaction,
about $130 billion in mar- cent years like Symantec Amazon, Google and Mi- operate as VMware once as long as VMware's board
ket value erased over rising for close to $11 billion in crosoft. the transaction closes. The continues to recommend
questions about advertiser 2019, and CA Technologies "VMware's platform and cash-and-stock deal also the proposed deal.q

Retailers' troubles sound the alarm for rest of economy

By DAMIAN J. TROISE various businesses. Com- sumer confidence and real
AP Business Writer panies had already been incomes, are also flashing
NEW YORK (AP) — The raising prices on goods red. "As goes the consum-
fastest inflation in 40 years to offset higher costs and er, so goes the economy
squeezed retailers during boost their profit margins. and ultimately the market."
the first quarter, alarming Consumer spending re- Target's profit tumbled 52%
investors worried about the mained resilient throughout from a year ago as costs
broader economy's out- 2021, despite rising costs. piled up. Walmart, the na-
look. But after Russia's invasion of tion's largest retailer, also
Earnings reports from Ukraine sent energy prices reported weak profit. Both
Walmart, Target and Am- skyrocketing, companies chains' revealed that con-
azon this month showed had a more difficult time sumers' spending is shift-
higher costs are hurting offsetting the costs. ing, with Walmart execu-
retailers' operations. While Consumers also shifted tives highlighting a shift to
profits for all companies in spending from high-priced private-label brands from
the benchmark S&P 500 discretionary items to nec- national ones, particularly In this July 21, 2021 photo, a consumer shops at a retail store in
index grew by about 9% essary goods, or just pulled in lunch meats. Morton Grove, Ill.
last quarter, retailers' prof- back altogether as higher Inflation is at a four-decade Associated Press
its contracted more than food and gas costs ate up high and the U.S. econo-
30% from a year ago. They more of their incomes. my shrank in the first three troubles are sounding the The retail sector's recent
blamed rising costs for raw "The consumer suddenly months of the year, the first alarm for other areas of the weight on the broader
materials, shipping and la- looked much more vulner- decline in gross domestic economy too. market could next bleed
bor for the slump. able" last quarter, said Brad product since the pandem- The labor market's slow re- through to overall hiring as
The weak results surprised McMillan, chief investment ic hit. The latest retail re- covery from the pandemic employers look to control
investors who were closely officer for Commonwealth ports have raised concerns over the last two years has costs, said Bill Adams, chief
watching the sector to see Financial Network. Other about more weakness to left it still 1.2 million jobs be- economist for Comerica
how inflation is impacting trends, like declining con- come this year.Retailers' low pre-pandemic levels. Bank.q