Broadcom to Divest VMware's End-User Computing and Carbon Black Units
Broadcom CEO Hock Tan has announced the company's plan to divest VMware's end-user computing and Carbon Black units, and shift to subscription licenses of bigger software bundles.
Broadcom's Divestment Strategy
Broadcom CEO Hock Tan revealed that the company intends to divest VMware's end-user computing and Carbon Black units in order to refocus on VMware's core business of creating private and hybrid cloud environments among large enterprises globally.
This move is part of Broadcom's strategy to enable global enterprises to run apps across datacenters and public clouds by using VMware's high-value software stack.
Tan also mentioned that Broadcom will invest in microservices tools to attract and retain workloads.
Shift to Subscription Licenses
The shift to subscription licenses is another key aspect of Broadcom's plan for VMware.
CFO Kristen Spears stated that Broadcom aims to convert over 60% of VMware's install base of licenses to subscription models by the end of fiscal 2024.
This change will also lead to a reduction in VMware spending, with a projected decrease to $1.4 billion per quarter by the end of FY '24.
Broadcom's Revenue Forecast
Broadcom forecasts that VMware will generate $12 billion of revenue for eleven months of its next financial year, excluding $2 billion from end-user computing and Carbon Black units.
The company reported a revenue increase for Q4, with $9.3 billion revenue, and projects a revenue of $50 billion for FY 2024.
The addition of VMware, along with the increasing demand for semiconductors and the AI boom, is expected to contribute to the revenue growth.