Hock Tan is a very very smart operator & one of the best capital allocator in tech (look at his record in M&A, dividends & stock performance) however he has failed miserably in taking care of SED. Here is why IMHO:
- SED is a collection of old technologies with large sticky customers but with almost no growth.
- SED execs are masters in PPT/XLS po-n, presentations, slides, RCAs, planning, buzz words, politics and putting lipstick on a pig.
- Their MO is: we know X did not work because of Z, we need to do X+Y-W, this will take a few quarters or a year or two then rinse and repeat.
- All these execs are doing is buying time and having their millions in RSUs vest. They are towards the end of their careers and want to own as many AVGO stocks as possible. The dividend alone will sustain their retirement lifestyle. They have been milking shareholders massively.
Hock needs to go back to basics: ignore ALL their BS, look at the numbers such as revenue per HC, profit per HC and most importantly cost vs ROI per HC etc, fire everybody director and above (NO EXCEPTIONS, they are the RC of the problems and will scare Hock & customers before going down, in every way possible for obvious reasons, it sounds scary at first but it’s doable and the top heavy purge is right & best thing to do, talk to Elon), give teams purely unambiguous financial targets (no mumbo jumbo), bring in a few new execs who understand finance & ROI if remaining managers are confused. Alternatively make some of the good managers “who code themselves” in charge (there are some).
Finally, if this doesn’t work (although it will), divest SED.
(Derived from my original post https://www.thelayoff.com/post/@Bzxw+1rN1nTj6)