Broadcom loses another big VMware customer

Broadcom's handling of the VMWare acquisition gives me a renewed perspective and surprising appreciation of Oracle.

Both of them are lawnmowers.

They are looking to extract the maximum amount of money possible. I'd argue that Broadcom could extract more money with smaller uplifts but I think they are also looking to consolidate their customer base. Some of these crazy numbers may be doing just that - saying that these people aren't wanted as customers anymore.

Extracting the maximum amount of money possible is the primary purpose of a company. It’s what you should expect to happen.

I mean, sure it is, if you have a severe case of sociopathy.

They're just monetizing goodwill until it's zero.

> Extracting the maximum amount of money possible is the primary purpose of a company.

Is it really though?

Don't normalize either.

Maximizing the long term value of the company can be at odds with extracting the most amount of money over the next quarter.

For example, Meta could say "if you don't pay us 100 dollars per year, we will delete your entire account including all of your memories and photos across instagram, threads, and Facebook" and probably make a giant amount of money in the next quarter as people panic over losing their memories to something they considered reliable. However, it would kill the company's long term growth.

That's capitalism for ya.

I'd say we're dipping more towards a return to feudalism.

It's really not, but certain economist pushed such idea a lot to the point people think it's a law (and pushed it in business ethics context to make it funnier)

Not really.

For public companies the primary goal is creating the highest possible stock price, or in rarer cases high dividends. Extracting as much money as possible is a common strategy for achieving that but it's not the only one. And arguably the strategy is used way more than it should be. Boards tend to set up bad incentives for the company leadership.

For private companies the goal is whatever the owner wants. That can be profit, but often it's about legacy. Or something entirely different. As far as we know SpaceX's purpose is indeed to create a self-sustaining mars colony

> Extracting the maximum amount of money possible is the primary purpose of a company. It’s what you should expect to happen.

Except that's not what they are doing. By all accounts (and their financial guys may disagree with me and that's ok), what they are actually doing is trying to extract more money than what the market will bear. They may succeed for a while, but it comes at the cost of cannibalizing your own business.

Who knows, maybe they are thinking we’ll buy VMWare for $x, use the implicit lock in to extort customers until there’s nothing left in three years, get a tax write off, and pocket $3x.

They certainly are losing customers, but that also reduces costs on their side, which means lower overall revenue, but higher margins. Maybe they are trying to get rid of anyone who isn't so locked in that they cannot leave, consolidate everything around the biggest and most profitable accounts. Once you know how large that group is, you can squeeze them even further.

> Both of them are lawnmowers.

For those that do not know the reference, "Fork Yeah! The Rise and Development of illumos" by Bryan Cantrill at LISA11:

* https://www.youtube.com/watch?v=-zRN7XLCRhc&t=38m24s

And the lead up is entertaining too:

* https://www.youtube.com/watch?v=-zRN7XLCRhc&t=34m7s

> Extracting the maximum amount of money possible is the primary purpose of a company.

[citation needed]

More subtle consideration: over what period of time? A quarter? Year? Decade? Other?

The leadership at Boeing tried to maximize numbers for a while, and where are they now?

Jack Welch who is/was all about monetary results:

> Regarding shareholder value, Welch said in a Financial Times interview on the global financial crisis of 2008–2009, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy...your main constituencies are your employees, your customers and your products."[69]

* https://en.wikipedia.org/wiki/Jack_Welch#Politics