What's Going On With Broadcom Stock Tuesday?

Broadcom Inc AVGO has paused the sale of its security software division, Carbon Black, potentially valued at around $1 billion, including debt, after receiving offers that failed its expectations.

Despite the possibility of reattempting the sale, Broadcom remains silent.

This decision comes as Broadcom sought to divest Carbon Black and its end-user computer unit, the latter of which KKR & Co Inc KKR agreed to purchase for approximately $4 billion, Bloomberg reports.

These efforts followed Broadcom’s acquisition of the businesses through its $61 billion takeover of VMware Inc in November.

In November 2023, a leaked email revealed Broadcom’s plans to review “strategic alternatives” of two of VMware’s business units.

Recent reports indicated that Nvidia Corp NVDA is expanding into custom AI chip design, directly challenging Broadcom in the custom silicon market. Nvidia aims to utilize its stronghold in the high-end AI chip sector, which controls about 80% of the market, to penetrate a burgeoning field.

This strategic shift, driven by the growing trend of tech giants like OpenAI and Microsoft towards bespoke chips, threatens Broadcom’s market share in the data center custom silicon, valued at approximately $30 billion in 2023.

Meanwhile, Broadcom CEO Hock Tan’s annual pay surged to $161.8 million last year, mainly due to a $160.5 million stock award set to vest over five years, marking a 167% jump in his total compensation.

While his salary remained at $1.2 million in 2023, the absence of non-equity incentive compensation, which previously added $5.4 million, was noted.

Broadcom described the substantial stock award as “front-loaded,” indicating no further annual equity awards during the vesting period, Bloomberg reports.

This increase reflects the company’s recognition of Tan’s pivotal role in transforming Broadcom into a leading infrastructure technology company, leveraging strategic acquisitions such as VMware Inc, CA Technologies, and Symantec Corp’s corporate security business.

Additionally, Charlie Kawwas, head of Broadcom’s semiconductor division, saw his compensation rise to $49.7 million in 2023, primarily through a similar $48.2 million award.

Broadcom stock gained 21% year-to-date and Nvidia over 64%.