A Wall Road analyst warns that Broadcom's reported bid for Symantec will increase questions — together with why a chipmaker would wish to purchase a cybersecurity firm with a sagging enterprise (AVGO, SYMC)

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Broadcom CEO Hock Tan

  • Broadcom’s reported bid to purchase Symantec will possible increase questions on the chipmaker’s technique, a Morgan Stanley analyst stated.
  • Broadcom has been focusing extra on shopping for software program firms, but it surely’s unclear what it hopes to achieve from shopping for the struggling cybersecurity software program big, the analyst stated.
  • Click on right here for extra BI Prime tales.

Broadcom’s reported plan to purchase Symantec does not solely make sense and can possible increase questions on the chipmaker’s technique, a Morgan Stanley analyst stated in a observe.

Broadcom was reported to be in “superior talks” to purchase cybersecurity big Symantec, which sparked a rally within the cybersecurity big’s shares this week. The inventory closed at $25 Friday, up greater than 20% from Monday. Broadcom’s inventory closed at $282.66, off 6% in the identical interval.

Broadcom was additionally reportedly contemplating shopping for cloud software program firm Tibco, in line with CNBC.

If the reviews are true, the transfer highlights Broadcom’s plan to focus its M&A method on software program firms, Morgan Stanley analysts Craig Hettenbach stated in a observe. However he stated it is unclear what Broadcom would acquire from shopping for the struggling software program big, he wrote.

Learn extra: Broadcom tells Wall Road it would give attention to buying software program firms, a yr after the Trump administration squelched its $117 billion Qualcomm acquisition

“At a time of weak semiconductor fundamentals and contemplating the deterioration in Symantec’s enterprise, there’ll possible be many questions on” Broadcom’s reported bid, Hettenbach stated.

Symantec, thought-about a frontrunner in safety software program, has wrestled with a number of points lately, together with missed Road expectations, administration adjustments and the quarterly lack of 250,000 subscribers, Hettenbach wrote.

It could be arduous to calculate the potential affect of the reported merger plan, “with out understanding the deal value, value reducing targets and potential divestitures,” Hettenbach added.

The reported acquisition bid comes at a time Broadcom has been reeling from critical setbacks. The Trump Administration blocked its $117 billion bid to take over rival Qualcomm. The corporate final month additionally slashed its fiscal 2019 income outlook by $2 billion, citing the affect of the Trump Administration ban on Huawei.

Spokespeople for Broadcom, Symantec, and Tibco didn’t instantly reply to a request for remark.

Acquired a tip about Broadcom or one other tech firm? Contact this reporter through e-mail at bpimentel@businessinsider.com, message him on Twitter @benpimentel. You can even contact Enterprise Insider securely through SecureDrop.

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