Broadcom, VMware stocks up on blockbuster deal

Yahoo Finance Live’s Emily McCormick breaks down the stock rise for Broadcom and VMware after an acquisition deal was announced.

Video Transcript

BRIAN CHEUNG: Let's take a look at some other stocks on the move. Chip-maker Broadcom announcing this morning that it will be buying cloud computing company VMware in a $61 billion cash and stock deal rumored earlier this week. Now that's final. Joining us with more on this is Yahoo Finance's Emily McCormick. Emily, we're seeing some stock movement off of that news.

EMILY MCCORMICK: Absolutely, Brian. And as you mentioned, this was a deal that we heard reports about earlier this week. So it is interesting to continue to see both Broadcom and VMware shares moving higher on the heels of this now official deal announcement. Now diving into the details here, this is a blockbuster deal of Broadcom purchasing VMware for $61 billion in cash and stock. This is going to be one of the biggest ever deals in the tech space.

And just taking a look at what this would actually mean for VMware shareholders, investors can select actually receiving $142.50 in cash or 0.2520 Broadcom shares per VMware share that they currently hold. Now this would represent an about 40% premium to where VMware shares were trading Friday before we initially got those media reports over the weekend from Bloomberg.

Now, as we can see here, VMware shares moving up by about 2.8% on an intraday basis. If we look back over the past five days, though, a much more market-- more than 30% increase. And you could see that move to the upside there when those media reports were first being announced. And a similar move to the upside here that we're seeing in shares of Broadcom on an intraday basis.

Now, also in the tech software space, I do want to highlight one stock that's moving to the downside. And that is shares of Snowflake. Now this stock is down more than 15% on a five-day basis, more than 6 and 1/2% on an intraday basis. This company just reported results yesterday that disappointed against Wall Street expectations, particularly on the guidance side. Now the cloud infrastructure software company said that it sees full year product revenue coming in between $1.89 and $1.9 billion short of the $1.91 billion that Wall Street was expecting.

And even on the high end of that range, that would suggest year over year sales growth of about 67%, which would be a pretty market slowdown from the about 106% year on year growth that Snowflake saw in the same fiscal year period last year. So because of this, because of this idea that we are seeing more slowdown here in some of these growth stocks, and especially in their top line results, we're seeing that stock under renewed pressure today and down more than 60% on a year to date basis. Guys.

AKIKO FUJITA: OK, thanks so much for that, Emily. Let's stay within the chip space, or we should say tech space.