Hundreds of employees face layoffs in wake of Broadcom-VMware merger

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Hundreds of employees face layoffs in wake of Broadcom-VMware merger

Broadcom have said they will lay off more than 400 VMware employees; and that's just the first wave of workers to be let go.

Published on 8th December 2023

Broadcom Inc., which has been in the process of acquiring enterprise software giant VMware Inc. for 18 months, will lay off at least 401 VMware employees — 184 in Broomfield, Colo. and 217 in Atlanta — less than one week after it completed the $69 billion merger on Nov. 22.

This is merely the first wave of employees to be let go. A Broadcom representative told The New Stack that he was unaware of the total number of layoffs that would result from the merger. Broadcom enlisted 21,000 full-time employees as of October, while VMware reported 38,300 FTEs in February.

The layoffs will impact staff in several countries and across a variety of roles spanning cloud, technical, engineering and marketing functions. This is according to VMware APJ vice president of partner ecosystem and commercial organization, Uma Thana Balasingham, who received her layoff notice this week and discussed it on LinkedIn.

“My initial encounter a few years ago with redundancy was unplanned, creating a disruptive transition and a confidence hit. In contrast, my current experience at VMware allowed for more preparation, although it still carries a sense of finality — a ‘good sad’ as I call it — that’s hard to ignore,” Balasingham wrote.

San Jose, Calif.-based Broadcom’s core business is in wireless, networking, cable modem and infrastructure components, which accounts for about 75% of its $40 billion yearly income. The company’s other business segments include semiconductor solutions and licensing, which account for the remaining 25% of its revenue.

Palo Alto, Calif.-based VMware will bring a $8.5 billion business into the Broadcom fold, which already includes 40 previous acquisitions, such as Symantec, CA, Brocade and Norton LifeLock.

VMware products fill a key computing layer for companies with on-premises data centers and hybrid cloud-based computing models. The company’s software layers provide virtualization, provision, management, load balancing and other key aspects of running applications in data centers. The company is widely known for its desktop virtualization software. It has been estimated by many industry people that more than 95% of all data centers utilize at least one VMware component.

From the time the acquisition was announced in May 2022, Broadcom had informed Wall Street analysts that there would be major cuts to VMware staff; as much as $250 million in overlapping services and staff positions were identified. In that May 2022 discussion, Broadcom CEO Hock Tan outlined a strategy to increase VMware’s profitability by $3.8 billion by “eliminating duplicative general and administration functions across human resources, finance, legal, facilities and information technology.”

How Broadcom Is Restructuring VMware

VMware is being reorganized into four divisions. They are:

Tanzu: VMware’s Tanzu platform enables enterprises to build and maintain container applications. The unit is led by Purnima Padmanabhan.
VMware Cloud Foundation: This division is dedicated to commercializing VMware Cloud Foundation, a software suite that includes Tanzu, as well as a range of other products that include the company’s flagship vSphere hypervisor and NXS network management platform. The Cloud Foundation unit is led by Krish Prasad.
Application Networking and Security (ANS): This division is responsible for VMware’s application networking and security products and is led by Umesh Mahajan.
Software-Defined Edge: This division focuses on VMware’s software-defined edge products and is led by Sanjay Uppal.

The reorganization coincides with the departure of CEO Rangarajan Raghuram, who led VMware from June 2021 until the completion of its acquisition by Broadcom. Raghuram, who joined VMware in 2003, will remain as an advisor to Tan for a period of time.

Tan has said that Broadcom has set a goal of more than doubling VMware’s EBITDA (earnings before interest, taxes, depreciation and amortization) to $8.5 billion within three years of the acquisition’s completion. One way the chipmaker can go about the task is by cutting costs, which could involve layoffs. In September, VMware executives reportedly confirmed to employees that job cuts were coming.

In a Nov. 22 blog post announcing the acquisition’s completion, Tan wrote that the chipmaker will invest significantly each year “to advance VMware’s innovation and customer value.” Half of that investment is set to go towards product development initiatives. The remainder will “help accelerate the deployment of solutions through VMware and partner professional services,” Tan detailed.

Tan indicated that Broadcom’s investment strategy will be focused most heavily on VMware’s Cloud Foundation platform. “Broadcom’s focus moving forward is to enable enterprise customers to create and modernize their private and hybrid cloud environments,” Tan wrote. “At the core, Broadcom will invest in VMware Cloud Foundation, the software stack that serves as the foundation of private and hybrid clouds.”