Here's Broadcom's Plan to Boost Earnings
Semiconductor supplier Broadcom(NASDAQ: AVGO)spent $18.9 billion earlier this year to acquire CA Technologies, a company that makes most of its money selling software for mainframe systems. The plan was to tap into CA's customer base, comprised of some of the largest companies and organizations in the world, and cross-sell products from Broadcom's portfolio. Broadcom CEO Hock Tan laid out these adjustments during the fourth-quarter conference call, saying that the multiyear plan will raise CA's annual operating profits to more than $2.5 billion. "So, moving forward, we are going to move away from the inflexible, perpetual license model for enterprise software to an enterprisewide, all-you-can-eat license for all of our core accounts. By doing this, we expect to remove the friction caused by selling expensive up-front perpetual licenses so that the incremental costs for our customers to expand the use of enterprise products will be highly competitive relative to [software-as-a-service]-based alternatives," Tan said.