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Broadcom’s CEO threw up a $19B hail mary to buy an unrelated software company, and now their stock is paying the price. The Hustle Fri, Jul 13 Brought to you by Better Mortgage… calculate your monthly mortgage payment in 3...
By: Wes Schlagenhauf
July 13, 2018
Broadcom’s CEO threw up a $19B hail mary to buy an unrelated software company, and now their stock is paying the price.
Brought to you by Better Mortgage… calculate your monthly mortgage payment in 3 minutes flat.
Known for savvy buys, Broadcom’s rogue CEO baffles Wall Street with a $19B deal
Silicon Valley-based chipmaker Broadcom just bought seemingly unrelated New York software company CA Technologies for $18.9B, paying 20% more than the company’s stock value.
Confused by the purchase, investors sent Broadcom’s stock plummeting 19%.
But, Broadcom CEO Hock Tan has a cult following thanks to his track record of successful and unexpected acquisitions, leading many to wonder: What’s Hock hiding up his sleeve?
Broadcom has boomed in the last decade
From 2009 to 2017, Broadcom’s share price increased 14x and the company became the largest player in the $400B chip market.
Within that time period, Broadcom’s revenue increased 49% annually -- giving the company plenty of cash to pursue an aggressive expansion policy under the Hock-like supervision of its CEO.
“In Hock we trust”
Broadcom owes its remarkable growth to Hock Tan, a Malaysian immigrant who earned scholarships to MIT and Harvard Business School before building a global computer hardware empire.
Tan increased Broadcom’s revenue by purchasing smaller businesses, stripping them down to their highest-performing units, and incorporating them into the company. With this acquisition strategy, Tan managed to increase Broadcom’s profit margins by more than 20 percentage points.
Hock’s past success has earned him a fan club of financial analysts that say things like “In Hock We Trust” and “it’s hard to bet against this guy.”
But not everyone agrees that Hock rocks
After President Trump blocked Broadcom’s $117B hostile bid for Qualcomm earlier this year, Hock decided to invest in a software company to avoid the harsh light of antitrust scrutiny.
But this time, investors are skeptical the Hock-star could replicate his semiconductor success, driving Broadcom’s market cap down as much as $14.5B.
But Hock isn’t worried. He told reporters that this purchase would be the first “building block” of many acquisitions to come.
Long live Hock-n-roll
Porn site Naughty America pitches a tent at the top of the first real VR wave
The rise of VR is nigh. And, with immersive videos like “Bangin’ the Babysitter,” plus other, more NSFW titles, porn site Naughty America is leading the charge.
According to David M. Ewalt (author of the book “Defying Reality: The Inside Story of The Virtual Reality Revolution”), the San Diego-based studio is one of the most productive VR content creators in the world -- releasing over 108 VR vids since their launch 18 months ago.
We wish we were surprised…
Any human with reproductive organs should’ve seen this coming a mile away.
Give people a cutting edge technology and they’ll find a way to make it X-rated: Ewalt says the porn biz has helped pioneer the popularization of pretty much every other revolutionary media format in the past -- from VHS, to Blu-ray, and video streaming.
But no one knew it’d be this big
In 2016, Samsung, HTC, Google, Sony, and Facebook’s Oculus sold just over 6m VR headsets worldwide… while NA’s customers downloaded more than 20m VR vids in the month of December that year alone.
VR also has people paying for porn again, and NA has the data to back it up: 1 in every 167 visitors who peep VR pages on NA’s website becomes a paying customer, compared to 1 in 1,500 for traditional.
In the first year of their VR service, NA’s website grew 55%; revenue grew 40% since their first VR video; in 2016, VR revenue was up 433%.
Game-maker Activision Blizzard struck a deal with Disney on Wednesday to air the Overwatch League playoffs on ESPN and Disney XD -- premiering them that very same day.
The Overwatch League is the first city-based league for competitive gaming, with teams like the Dallas Fuel and the San Francisco Shock. Not to mention some huge name backers such as New England Patriots CEO, Robert Kraft, and Kevin Durant.
And with this deal come even more firsts
The agreement marks the first time a live competitive gaming event has aired during prime time on ESPN, and the first broadcast of an esports championship on ABC.
The multi-year deal will also air Overwatch League Season 2 next year, reportedly amounting to hundreds of hours of programming across 4 major networks.
Yes, but how do esports stack up against real sports?
TechCrunch notes that the growth of gaming stars through Twitch and the popularity of gaming in general have carved out new territory in sports media -- and a new, lucrative industry.
According to Newzoo, by 2020 sponsorship revenue is expected to reach $655m, and ad spending will grow to $224m, which is child’s play vs. the NFL’s $1.3B in sponsorship revenue last year alone.
But, as they say in sports, it’s not about where you start, but where you end up, and everything is slowly coming together for esports to create an audience big enough to get advertisers’ attention.
Chinese snake milkers make $3m selling deadly venom to pharma companies
Snake farmers in the tiny Chinese village of Zisiqiao make up to $3m a year by selling snake venom harvested from millions of deadly reptiles, reported the South China Morning Post.
These farmers sell the profitable poison to large pharmaceutical companies that need the deadly snake juice.
Why do pharma companies need snake venom?
Pharmaceutical companies use real snake venom that is ‘milked’ from live snakes to produce the antivenom that treats potentially lethal snakebites.
The number of people bitten by venomous snakes each year is only increasing from the current 2.7m annually, and that means pharma companies are upping their research and development of antivenom.
The market for antivenom is expected to rise to $2.95B by 2025, and with it, the demand for venom.
If you’re hard up for some dollars, go milk a snake
Since snake venom is hard to find and harder to (safely) harvest, communities with lots of scaly squatters reap the financial benefits (a single gram of snake venom is worth around $750).
Since commercial snake farmers can raise millions of snakes at a time, the venom business can reshape local economies. The village of Zisiqiao has a population of 600 people -- but, thanks to its 3m serpents, its snake farms generate $12m annually.
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Understanding home ownership often feels like it requires a Ph.D. What you need is someone that cuts it straight, gives you the facts about different mortgages -- oh, and lets you know exactly how much it will cost you.
It’s just better. Better Mortgage gives you the tools and resources to understand the whole home ownership jazz.
With Better Mortgage’s pre-approval tool and mortgage calculator, you just plop in a few details like your income and zip code, then WHAM -- see mortgage options and monthly payment projections instantly.
Their site is also packed with informative articles and videos featuring humans that -- get this -- talk to you like you’re a human.
Plus, Better Mortgage consultants don’t get paid a commission, so they have your best interests in mind when they’re helping you, not their paychecks.
It’s how Better does mortgages -- and, as the name says, it’s just better. Visit Better Mortgage to play around with their mortgage calculator. We did and can’t stop.
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