The acquisition of VMware was completed on November 22, 2023, enhancing Broadcom's infrastructure software capabilities. VMware contributed $2.674 billion in net revenue for the fiscal quarter ended May 5, 2024.

On April 23, 2024, Broadcom acquired certain assets related to the design, development, and manufacture of System-on-Chip (SoC) operations of Seagate Technology Holdings plc for $600 million. This acquisition strengthens Broadcom's portfolio of SoC products.

Broadcom has classified VMware's EUC business as held-for-sale and expects to complete the sale in calendar year 2024. This divestiture aligns with Broadcom's strategic objectives following the VMware acquisition.

Broadcom initiated restructuring activities to integrate the acquired VMware business, align the workforce, and improve operational efficiencies. These activities resulted in $345 million of restructuring charges during the fiscal quarter ended May 5, 2024.

Broadcom repaid $2.0 billion on its unsecured term A-2 facility during the fiscal quarter ended May 5, 2024. This demonstrates a commitment to managing debt levels following the VMware acquisition.

Subsequent to the close of the fiscal quarter ended May 5, 2024, Broadcom completed an intra-group transfer of certain IP rights to the United States through a supply chain realignment. This is expected to result in a discrete tax expense of up to $4.9 billion during the fiscal quarter ending August 4, 2024.

The failure to realize the expected benefits from the VMware Merger may adversely affect Broadcom's business and the value of its common stock. This includes challenges related to preserving customer relationships, integrating financial and operational systems, and managing the VMware workforce.

A relatively small number of customers account for a significant portion of Broadcom's net revenue. Direct sales to one customer, which is a distributor, accounted for 29% of net revenue for the fiscal quarter ended May 5, 2024. The loss of, or significant decrease in demand from, any of the top five end customers could have a material adverse effect on Broadcom's business.

Broadcom's substantial indebtedness could have important consequences, including increasing vulnerability to adverse economic conditions, exposing the company to interest rate risk, and limiting flexibility in planning for or reacting to changes in the economy and the semiconductor industry.

The industries in which Broadcom operates are highly competitive and characterized by rapid technological changes, evolving industry standards, changes in customer requirements, often aggressive pricing practices and, in some cases, new delivery methods. Increased competition could prevent Broadcom from growing its revenue.

We depend on our CMs to allocate sufficient manufacturing capacity to meet our needs, to produce products of acceptable quality at acceptable yields and to deliver those products to us on a timely basis. We do not generally have long-term capacity commitments with our CMs and substantially all of our manufacturing services are on a purchase order basis with no minimum quantities.

Our success depends in part upon protecting our IP. To accomplish this, we rely on a combination of IP rights, including patents, copyrights, trademarks and trade secrets, as well as customary contractual protections with our customers, suppliers, employees and consultants. We spend significant resources to monitor and protect our IP rights.

In connection with the VMware Merger, Broadcom initiated restructuring activities to integrate the acquired business, align the workforce and improve efficiencies in operations. The company expects these activities to be substantially completed by the end of fiscal year 2025.

Subsequent to the close of the fiscal quarter ended May 5, 2024, Broadcom completed an intra-group transfer of certain IP rights to the United States through a supply chain realignment. This is expected to result in a discrete tax expense of up to $4.9 billion during the fiscal quarter ending August 4, 2024.

Gross margin decreased to 62% of net revenue, compared to 70% in the same period last year. This decrease is primarily due to higher amortization of acquisition-related intangible assets from the VMware Merger.

On April 23, 2024, Broadcom acquired certain assets related to the design, development, and manufacture of System-on-Chip (SoC) operations of Seagate Technology Holdings plc for $600 million. This acquisition strengthens Broadcom's portfolio of SoC products.

Research and development expense increased $1,103 million, or 84%, for the fiscal quarter ended May 5, 2024, compared to the prior year fiscal period. The increases were primarily due to higher compensation, including higher stock-based compensation, as a result of an increase in headcount from the VMware Merger.

The following table presents our preliminary allocation of the total purchase price. Goodwill is allocated to the semiconductor solutions segment and is deductible for tax purposes. In-process research and development was $70 million.

On June 11, 2024, Broadcom's Board of Directors declared a quarterly cash dividend of $5.25 per share on the common stock, payable on June 28, 2024 to stockholders of record on June 24, 2024.

During each of the two fiscal quarters ended May 5, 2024 and April 30, 2023, we repurchased and retired approximately 7 million shares of our common stock for $7,176 million and $3,994 million, respectively. All $20 billion under our previously authorized stock repurchase programs was utilized prior to expiration on December 31, 2023.

We also expect capital expenditures to be higher in fiscal year 2024 as compared to fiscal year 2023.

There is an increasing focus from lawmakers, regulators, investors, customers, employees and other stakeholders concerning ESG matters, including environment, climate, diversity and inclusion, human rights and governance transparency.

We are subject to a variety of domestic and international laws and regulations relating to the use, disposal, clean-up of and human exposure to hazardous materials.

The semiconductor products we develop and sell are used for high volume applications. As a result, the prices of those products have often decreased rapidly.

A general slowdown in the global economy or in a particular region or industry, other unfavorable changes in economic conditions, such as inflation, higher interest rates, tightening of the credit markets, recession or slowing growth, or an increase in trade tensions with U.S. trading partners could negatively impact our business, financial condition and liquidity.

Our business is subject to various domestic and international laws and other legal requirements, including anti-competition and import/export regulations, such as the U.S. Export Administration Regulations, and applicable executive orders.

A majority of our products are produced, sourced and sold internationally and our international revenue represents a significant percentage of our overall revenue.