Broadcom stock plummets amid head-scratching CA deal

A Broadcom sign outside company offices.
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If you can't understand why chipmaker Broadcom is buying software maker CA, you aren't alone. The stock dropped more than 15% in morning trading with analysts struggling to understand the $19 billion deal.

The bottom line: Having failed in its bid to buy Qualcomm, CA is now looking very far afield.

Broadcom buying CA for $19 billion

Photo by Justin Sullivan/Getty Images

Broadcom on Wednesday announced plans to buy IT management software company CA for $18.9 billion in cash, just months after U.S. regulators blocked Broadcom's deal to buy fellow chip-maker Qualcomm.

The bottom line: The Qualcomm experience suggested that Broadcom, which was based in Singapore before redomiciling to the U.S., is unlikely to get regulatory approval for another chip deal. So it's going with a software play instead — kind of like when Intel bought McAfee (even though Intel is trying to extricate itself from that deal.)