Analyst, Mandy, Bloomberg discussed on P&L With Pimm Fox and Lisa Abramowicz


Corporation cyber security obviously very hot field right now given how many threats are from hackers joining us now to talk about the deal mandy things senior tech industry analyst for bloomberg intelligence very much in it'd be office unprecedented analyzing this deal on this pre july fourth day in new york city so hi mandy but what can you tell us about this deal but you find most interesting well this deal is very similar to what broadcom did with ceo last year and a water tells you is the company's trying to diversify from hardware software after it's fairly obvious the steel has the exact same kurtz districts four billion dollars in revenue from semantic and the company's semantic has been a you know under performing for the last three years when you look at the cyber security market which is extremely fragmented semantic hasn't been able to turn itself around there had four ceo changes and now you know they don't even have a permanent ceo so looks like it's right in the playbook of coq ten the ceo broadcom broadcom she really could execute on this one and there are some synergies that obviously will come about this deal gets announced these broadcom folks are really active on emanate from lisa mentioned qualcomm that deal was blocked by president trump they bought cea last year is the street backing up a this management in this board in terms of this aggressive acquisition policy they are an broadcom is a serial acquire you can see that you know it's something that i feel it's in the dna of the company funny and they executed very well so if there's anybody out there you know when it comes to large tax that can really turn around semantic and fix it it's gonna be broadcom and and so from that perspective it makes a lot of sense when you talk about synergies what are they they do you think of broadcom as being hardware story and i think of as mad as being a software company sure so a what broadcom has showed cea integration is obviously there are some revenue synergies because they cater to an enterprise customer base so semantics revenue half of it comes from enterprise so over there you could see now that broadcom has a footprint in infrastructure software bitsy integration they can really leverage semantic on the enterprise side on the consumer seamer side richard semantics flack ship norton product and the lifelock business i'm not sure of there any minute synergies special under such revenue side on the cost side yes there are some synergies that will come about simply because this this company is too big their sales and marketing expense is a very high for semantic and you can see there are some costs synergies over there so obviously this deal has not been announced a speculating that it will kearney census devaluation i'm looking at broadcom stock down about almost four percent since today is there a risk that they might overpay well one thing is they're more likely to go for stock deal simply because of broadcom trade said about five or six times sales symantec trade said about three four times sales so i can see you know why abroad com may be interested in using their stock more and we've seen that with salesforce you know buying tabloid with an all star offer so given the leverage situation a with broadcom's they're more likely plea to use a some stock here one thing i'm curious about is why is broadcom's so aggressive why is their playbook acquisitions to such a degree well look at it this way broadcom's a dna at the company honey is built around hardware they're really trying to you know a a an end hardware businesses have lor if the margins operating margins so i think what software gives them in this case semantic has operating margins over thirty percent so now with cea end symantec broadcom's so operating margin profile goes up simply because softer businesses are attractive so are we going to see more emanate here in the security cyber security space i mean lisa correctly pointed out that boyd it's it's a hot area do you think we're gonna see more consolidation they're absolutely cyber security is one area in this off the softer and market that's very fragmented there are new attacks happening every day their new companies popping up everyday that solve those attacks and you know the fragmentation a is a nightmare for enterprises because they're just putting bandaids you know putting one solution on top of another entitlement enterprise perspective they want to see some consolidation in the cyber security space so we've already seen the likes of paolo alto end for net and you know the nexgen firewalls security companies being acquisitive you're gonna see more outfit i think with this deal i feel like people just wanna throw all the smart people in cyber security at programming in a room and they just go figure out what's next i say if i were young engineer coming out of school i'd be like i'm gonna be us forget these apps thing i'm gonna be a cyber security expert because that's just like a growth second industry for a kit forever do you have time to have lunch with my son oh.

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