Enterprise, Content

Broadcom: CA Technologies Acquisition Performing Well (So Far)

Broadcom's buyout of CA Technologies is performing well, helping the parent company to deliver stronger-than-expected financial results for its Q1 fiscal 2019. Moreover, Broadcom is starting to promote CA's service provider solutions as part of a broader vertical market push.

Broadcom CEO Hock Tan
Broadcom CEO Hock Tan

For its Q1 fiscal 2019, Broadcom said:

  • Revenue was $5.789 billion, up 6.3 percent.
  • Net income was $471 million.

The figures generally beat Wall Street's expectations, and the company's stock rose about 7.7 percent on the first day of trading after the results were released.

Broadcom's $18.9 billion buyout of CA, announced in July 2018, initially confused investors since the two companies have little in common. However, Broadcom CEO Hock Tan tends to be a numbers wizard -- finding ways to trim costs and thereby maximize the profitability of acquired businesses.

During the Broadcom earnings call yesterday, Tan said:

"The integration of CA onto the Broadcom platform is very well underway and we are confident that we can meet, if not, exceed the long-term revenue and profitability target that we laid out for CA to you last year. In fact, renewals in our CA business have been strong this past quarter and we believe the dollar commitments from our core customers will continue to grow."

CA Technologies: Mainframe vs. Enterprise Software

Still, most of the buyout's focus has involved CA's mainframe software business -- prompting questions about Broadcom's commitment to more traditional enterprise, cloud and service provider software.

Although the mainframe industry is not a growth industry, it generates high-margin licensing, maintenance and support fees for CA and new parent Broadcom. By contrast, CA's more traditional enterprise, cloud and service provider software never quite lit the world on fire -- though the company had considerable pockets of success in certain vertical markets.

True believers include the MSP market, where midsize and large service providers embrace's CA's Unified Information Management (UIM) software to monitor and manage applications and infrastructure.

Poke around Broadcom's most recent marketing of the CA product portfolio, and the service provider offerings surface within the company's industry-specific solutions portfolio.

Broadcom Channel Strategy?

During yesterday's earnings call, Broadcom's executive team mentioned service providers and telcos as core focus areas -- but mostly for the company's WiFi and edge routing portfolio, rather than MSP-centric software like UIM.

Channel partners generally were not mentioned during the call, though both Broadcom and the CA Technologies business have partner programs.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.