$AVGO: Gartner Warns of 35% VMware Workload Decline — $102.5M Settlement Overhang Persists

Court: N.D. California

Case: 5:20-cv-02182

Gartner has issued a new forecast predicting that by 2028, over 35% of VMware workloads will migrate to competing platforms. The warning highlights the impact of Broadcom’s licensing changes, bundled product pricing, and restrictions on hyperscaler resale rights, which are pushing smaller businesses toward alternatives. Despite Broadcom’s 25% jump in infrastructure software revenue to $6.6B, concerns remain over customer attrition. Investors are reminded that the company still carries the weight of a $102.5M settlement linked to misleading backlog disclosures.

• 35% VMware workloads expected to shift away by 2028.
• Broadcom revenue up 25% in infrastructure software to $6.6B.
• Licensing overhaul replaces perpetual deals with costly subscriptions.
• Alternatives rising: Nutanix, Azure Local, OpenStack gaining share.
• $102.5M settlement from backlog misstatements continues to weigh.

Timeline Overview

• Aug 24, 2018 – Class period begins; VMware stock allegedly inflated.
• 2019–2020 – Reports show declining sales backlog, raising red flags.
• Feb 27, 2020 – Class period ends as backlog disclosures hit stock price.
• Oct 4, 2024 – Settlement stipulation filed in federal court.
• Mar 31, 2025 – Final settlement hearing scheduled.

Allegations Include

• Misrepresenting sales backlog and order fulfillment.
• Failing to disclose reporting and regulatory risks.
• Inflating share price through omissions and misleading commentary.
• Violating federal securities law §10(b) and Rule 10b-5.

Investor Update

Broadcom, through VMware, agreed to a $102.5M cash settlement to resolve claims tied to unfilled orders and misleading statements. While this payout resolves litigation exposure, questions remain over governance and customer trust as Gartner’s forecast signals longer-term erosion of VMware’s market share.

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