B4| Friday, August 9, 2019 **** THE WALL STREET JOURNAL.
Software Inc. and Electronic
Arts Inc.—also have reported
earnings above expectations
for the quarter ended June 30.
The stock prices for all
three companies slumped after
President Trump criticized the
“glorification of violence” in
videogames following the
weekend’s mass shootings that
left 31 people dead in El Paso,
Texas, and Dayton, Ohio. Two
other politicians, House Mi-
nority Leader Kevin McCarthy
(R., Calif.) and Texas Lt. Gov.
Dan Patrick, joined in the criti-
cism, with Mr. Patrick pointing
out that Activision Blizzard’s
Call of Duty was mentioned in
the alleged El Paso shooter’s
manifesto. The stocks have
since rebounded.to $1.01 billion, while monthly
active users declined 5% to
327 million. The company did
report an increase in the num-
ber of hours people played
Call of Duty.
Activision Blizzard main-
tained its full-year outlook on
net bookings of $6.3 billion
but raised its full-year out-
looks on profit and revenue. It
now expects profit of $1.41 a
share on revenue of $6.19 bil-
lion, up from its earlier esti-
mate of $1.18 a share and
$6.03 billion, according to gen-
erally accepted accounting
principles.
Shares of Activision rose 7
cents to $49.40 after hours.
Activision Blizzard’s
peers—Take-Two InteractiveTECHNOLOGY WSJ.com/Tech
Activision relied on updates and events for existing products.OLLIE MILLINGTON/GETTY IMAGESknown for its antivirus soft-
ware, that Broadcom is buying
focuses on sales to companies.
That part contributes about
half of Symantec’s $5 billion in
annual revenue. The consumer
segment accounts for the rest
of the 37-year-old company’s
revenue.
Broadcom Chief Executive
Hock Tan has been focused on
diversifying beyond the com-
pany’s core chip business and
pushing into the lucrative
software arena. Last year, he
struck a roughly $19 billion
deal to buy software firmCA
Technologies, formerly Com-
puter Associates.
The Symantec business will
add an expected $2 billion to
Broadcom’s annual revenuegoing forward, Broadcom said,
and would generate savings of
more than $1 billion by elimi-
nating cost overlaps in the
year after the deal closed.
After the deal closes,
Broadcom will own the Sy-
mantec brand name, the two
companies said.
Broadcom said it would
maintain its dividend policy of
paying investors half of its
free cash flow from the previ-
ous fiscal year, and use excess
cash to pay down debt rather
than repurchase shares. The
chip maker maintained its
guidance of generating $22.5
billion in revenue for the cur-
rent fiscal year that ends in
November.
Broadcom’s efforts to diver-sify into software through ac-
quisitions have gained particu-
lar importance after the chip
maker’s attempt in 2018 to
buy rival Qualcomm Inc.
failed. President Trump
blocked that proposed take-
over, citing security risks.
Broadcom has since moved its
headquarters from Singapore
to San Jose, Calif., to help alle-
viate such national-security
concerns.
Tech companies have been
splurging on software acquisi-
tions, with large deals and
many small ones. Sales-
force.comInc. on Wednesday
announced the $1.35 billion
acquisition ofClickSoftware
Technologies Ltd., which
works on workplace-manage-ment software. Microsoft
Corp. last week acquired a
small software provider, Blue-
Talon, for an undisclosed
amount to bolster its cloud-
computing business.
Shares of Symantec surged
more than 12% Wednesday af-
ter The Wall Street Journal’s
report, and climbed further on
Thursday.
Shares had fallen sharply in
July after the two companies
failed to reach an agreement
on the terms of a full-company
sale. Broadcom shares were
flat in after-hours trading
Thursday following a slight
uptick at the close.
Symantec said it would pay
a special dividend of $12 a
share and boosted a stock re-purchase program by $1.1 bil-
lion to $1.6 billion.
Rick Hill, Symantec’s in-
terim chief executive, said the
deal gave the company a nar-
rower, but clearer, focus on
the consumer cybersecurity
business, which includes Nor-
ton antivirus products,
Separately, Symantec re-
ported an 8% increase in sales
to $1.25 billion for the first
quarter of its financial year. It
swung to a 4-cent per-share
profit in the period from a 12-
cent per-share loss for the
year-prior quarter.
Symantec also announced
plans to cut around 7% of its
employees and close facilities
as part of a new restructuring
plan.of dollars on technology like
cross-country microwave net-
works. Even some high-fre-
quency traders say the race is
wasteful and offers little bene-
fit to ordinary investors. But it
benefits exchanges like the
NYSE and Nasdaq Inc., which
charge traders for fast access
to their systems.
Electronic-trading firms and
Wall Street banks say stock ex-
changes have ratcheted up such
fees in recent years. “What the
exchanges have done is create
a race condition to get to their
quotes as quickly as possible
and sell access to them to the
highest bidder,” said Sal Arnuk,
a partner at brokerage Themis
Trading.
Exchanges say their fees are
reasonable. Nasdaq declined to
comment.At the heart of the fight is a
pair of white, dish-like anten-
nas atop the NYSE’s data cen-
ter off New Jersey’s Route 17.
A person familiar with the
matter said the antennas were
installed two or three months
ago and shared photographs of
them with The Wall Street
Journal, although it couldn’t be
learned whether the antennas
have been activated.
The idea of the rooftop an-
tennas is to send signals from
the Mahwah data center to an-
other set of antennas mounted
on a nearby, 160-foot pole, re-
placing a span of fiber-optic
cable, NYSE representatives
told local officials while they
were seeking approval for the
additions earlier this year. That
speeds up the network, be-
cause signals travel through airfaster than through cable.
“The whole point of doing
the wireless links is to reduce
the [reliance] on fiber and
make the data delivery faster,
as fast as it can be,” Sanjam
Kaur, an ICE engineer, said in a
March 20 meeting of the Mah-
wah Board of Adjustment, a
zoning body.
Ms. Kaur didn’t respond to
requests for comment. A
spokeswoman for the Mahwah
local government declined to
comment.
From that 160-foot pole,
which stands just in front of
the data center, signals move
on through SFTI’s wireless net-
work linking U.S. stock ex-
changes. The antennas give a
tiny improvement of about
two-millionths of a second, ac-
cording to Virtu. That is sig-nificant because it threatens a
rival network run by McKay
Brothers, a firm that builds
communications infrastructure
for high-frequency traders.
To stay competitive, McKay
would need to replace over
1,000 feet of cable connecting its
network to the data center with
a wireless link—which would re-
quire having its own roof an-
tenna. But McKay says the NYSE
is denying rooftop access to ri-
val firms even though there is
room for many antennas.
“McKay believes that reserv-
ing roof access for a single pro-
vider has absolutely no techni-
cal justification,” said Bob
Meade, the firm’s co-founder.
“It is simply a way to gain an
advantage for a service that
would otherwise be subject to
competition.”The New York Stock Ex-
change is under fire over a pair
of antennas designed to
shave two millionths of a sec-
ond off the time it takes for
high-frequency traders to ac-
cess its computer systems.
Some of the most vocal op-
ponents are high-frequency
traders.
Last month, electronic-trad-
ing giantVirtu FinancialInc.
blasted the NYSE’s plan to add
the new equipment to the roof
of its data center in Mahwah,
N.J. Virtu said in a letter to the
Securities and Exchange Com-
mission that the initiative is
unfair because trading firms
will have to pay hefty fees to
access the antennas.
The reason: The NYSE is ex-
pected to give its own affiliated
network provider, called
SFTI, exclusive access to the
rooftop antennas, Virtu
said. That means there wouldn’t
be any cheaper providers that
can offer the same superfast
access. If trading firms want to
keep up, they would have to
use SFTI and pay its fees.
“The NYSE is just looking
for ways to use its monopolis-
tic advantage to charge pre-
mium prices,” Virtu Chief Exec-
utive Officer Douglas Cifu said
in an interview.
Representatives of the NYSE
and the SEC declined to com-
ment. The NYSE is a unit of In-
tercontinental Exchange Inc.,
or ICE.
The spat is the latest twist
in the ultrafast-trading arms
race. High-frequency traders
make money through rapid-fire
trading of stocks, futures and
other assets. They must relent-
lessly adopt the fastest tech-
nology, or risk losing out. If a
firm doesn’t use the quickest
available network, for instance,
it will be preyed upon by com-
petitors that can act on mar-
ket-moving information a split-
second faster.
Over the years, the industry
has spent hundreds of millions
BYALEXANDEROSIPOVICH
NYSE Antennas Spark Backlash
Broadcom Inc. struck a
$10.7 billion deal to buySy-
mantecCorp.’s enterprise se-
curity business, as it steps up
efforts to expand beyond chip
making.
Semiconductor maker
Broadcom, which has a history
of acquisitions, said Thursday
the cash acquisition was the
next logical step in building a
business around software for
companies.
The Wall Street Journal on
Wednesday reported the two
companies were close to a
deal after talks for Broadcom
to buy all of Symantec col-
lapsed last month.
The part of Symantec, best
BYASAFITCH
Broadcom Makes Deal for Symantec Security Business
YelpInc. beat profit fore-
casts for the second quarter,
and shares of the online-review
company rose more than 4% in
postmarket trading Thursday.
The San Francisco-based
company reported net income
of $12 million, or 16 cents a
share. Analysts forecast 12
cents a share in earnings, ac-
cording to FactSet. Yelp re-
ported net income of $11 mil-
lion in the second quarter of
2018.
The company said in a letter
to shareholders it has made
changes to the way it works
with business customers, allow-
ing it to boost revenue without
adding to its sales force. That
shift, along with other changes,
has allowed the company to
bolster profit, the letter said.
Yelp said second-quarter
revenue grew 5% from the
same period a year earlier to
$247 million, an amount in line
with forecasts from analysts.
The company also said fi-
nance chief Charles Baker will
step down from his position in
September. He will joinEvent-
brite Inc., according to a
statement from the ticketing
firm. James Miln, a Yelp vice
president, will serve as the
company’s interim finance
chief when Mr. Baker departs.
Yelp said that in the second
quarter, it had 197,000 paid ad-
vertising accounts, a measure
which shows how many busi-
nesses have paid for ads over
a three-month period, up from
192,000 in the first quarter.
Yelp reaffirmed its prior
guidance that revenue would
grow 8% to 10% this year com-
pared with 2018. The company
derives the vast majority of its
revenue from ads on its plat-
form.BYMICAHMAIDENBERGYelp’s
Quarterly
Profit Tops
Estimates
Two antennas on the roof of an NYSE data center are designed to offer superfast access to the exchange’s computer systems.Activision BlizzardInc.’s
revenue fell nearly 15% in the
second quarter, hurt by the
videogame maker again not
releasing any major new
games during the period.
The largest U.S. game pub-
lisher by market capitalization
instead leaned on content up-
dates and special events for
existing franchises to keep
players engaged, just as it did
a year ago.
“I’m encouraged by the
early momentum of our in-
creased focus across our key
franchises,” Activision Blizzard
Chief Executive Bobby Kotick.
The next installment of Call of
Duty, due out Oct. 25, includes
a new multiplayer mode. A
new mobile Call of Duty game
is also in the works.
For the second quarter, Ac-
tivision reported a profit of 43
cents a share on $1.4 billion in
revenue, under generally ac-
cepted accounting principles,
down from 52 cents a share
and $1.64 billion a year earlier.
On an adjusted basis, the
results implied a profit of 38
cents a share on net bookings
of $1.21 billion—both down
from a year earlier, but better
on net bookings than the com-
pany’s guidance and the aver-
age analyst estimate on Fact-
Set.
Digital net bookings fell 16%BYSARAHE.NEEDLEMANActivision Blizzard’s Lack of New
Videogames Hurts Earnings
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