Broadcom to let go 1,800+ VMware employees amid push for increased profitability
Broadcom Inc. is letting go more than 1,800 VMware employees amid an effort to boost the virtualization giant’s earnings significantly.
The San Francisco Chronicle reported the job cuts on Thursday, citing regulatory filings. Some 1,267 of the employees who will be let go work at VMware’s headquarters in Palo Alto, California. An additional 600 affected staffers are based in Washington, Colorado and Georgia, while the remaining job cuts will be made at other locations.
The development comes less than two weeks after Broadcom completed its $61 billion purchase of VMware. The deal, which was originally set to close in February, drew scrutiny from multiple antitrust regulators and had to be delayed multiple times. Broadcom finally closed the transaction on Nov. 22 after securing regulatory approval in China.
Broadcom has set a goal of more than doubling VMware’s earnings before interest, taxes, depreciation and amortization to $8.5 billion within three years. Ahead of the deal’s approval, it was widely speculated that the chipmaker will make layoffs as part of the effort. An early confirmation of the plan arrived in September, when executives reportedly informed VMware staffers that the layoffs could begin before the acquisition’s completion.
The workforce reduction is reportedly part of a broader restructuring initiative. Earlier this week, Broadcom Chief Executive Hock Tan reportedly told employees that the company will relocate its headquarters to VMware’s 1.6 million-square-foot head office in Palo Alto. Broadcom’s current main campus is a 109,000-square-foot property in San Jose.
As part of the restructuring initiative, the chip giant is also reorganizing VMware into four business divisions.
One division will focus on the virtualization giant’s Tanzu platform for building and deploying container applications. Another is set to commercialize VMware Cloud Foundation, a software bundle that combines Tanzu with a number of other products such as vSphere. The two other business units Broadcom is forming are known as the application networking and security, or ANS, and software-defined edge groups.
On Wednesday, Insider reported that the restructuring push may see Broadcom sell parts of VMware’s product portfolio. In particular, it’s said to be exploring strategic alternatives for the virtualization giant’s end-user computing and Carbon Black product lines.
The end-user computing portfolio is headlined by the Workspace ONE platform. It’s used by organizations to manage employees’ devices and provide them with access to work applications. VMware’s Carbon Black business, the other unit Broadcom may reportedly sell, provides cybersecurity software.
As for the virtualization giant’s other offerings, Tan stated in a blog post last month that “we plan to invest significantly each year to advance VMware’s innovation and customer value.” He indicated that the Cloud Foundation product suite will be a particular priority for the chipmaker. Tan detailed that half of Broadcom’s investment is set to go towards product development, while the remainder will be spent on go-to-market and partner initiatives.
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