By Aaron Pressman
July 12, 2018

Broadcom CEO Hock Tan spent decades successfully building his company into a semiconductor powerhouse through savvy acquisitions, until his $117 billion bid for Qualcomm was blocked by the Trump administration in March. Now Tan has struck out in a completely new direction, offering $19 billion for software developer CA Technologies.

Wall Street isn’t pleased. Investors and analysts rained down criticism of the deal on Thursday, sending Broadcom’s stock price plummeting almost 20% in morning trading. Update: the stock finished the day down 14%. Concerns ranged from the lack of expertise and potential synergies between the two companies to outright questioning of the CEO’s new direction.

“This deal runs completely against the investment narrative that management has been articulating since their attempt to buy Qualcomm,” analyst Romit Shah at Instinet wrote. “Management has stressed that Broadcom is focused on delivering shareholder value through organic growth, capital return and tuck-in acquisitions. This deal hurts management’s credibility, in our opinion.”

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Some said the deal seemed reminiscent of several ill-fated forays into software by Intel (intc), which wasted billions buying McAfee and Windriver only to sell off the software units for less later.

“We are getting investor pushback with an unexpected surprise at a big software acquisition as it potentially strays from (Broadcom’s) hardware focus with little overlap with current strategy,” analyst Vijay Rakesh at Mizuho wrote. The stock price fell “with investors concerned it changes the complexion of the company.”

Analyst Stacey Rasgon at Bernstein Research also found the move surprising and criticized the company for its lack of availability. “Since Qualcomm (qcom) slipped through Broadcom’s fingers, we have been waiting for them to announce a new (smaller deal). However, this one is not quite what we had in mind,” he wrote. “Our evening was mostly filled with confused and angry calls and emails as the company effectively just walked anyone who bought the stock over the last few months (on the back of small M&A/buyback commentary) right off the cliff. To that end, we are absolutely speechless that the company chose not to host a broad investor conference call; we find this decision indefensible.”

Broadcom (avgo) CEO Tan had tried to explain a common thread running through both companies in his announcement of the deal on Wednesday night.

“This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies,” Tan said in a statement. “With its sizable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses. We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”

But, it seems, few on Wall Street were listening.

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