Last week, Broadcom (NASDAQ:AVGO) announced that it had successfully acquired VMware after receiving a final regulatory approval from China. Broadcom previously received regulatory approval from the U.S. and U.K. The process took well over a year, as the company first announced the $69 billion acquisition in May of 2022.
Now, as is customary with many acquisitions, Broadcom has begun the process of laying off VMware employees. The exact extent of the layoffs is unknown
“As part of integration planning, and following an organizational needs assessment, we identified go-forward roles that will be required within the combined company,” said Broadcom in an email to laid-off employees viewed by Business Insider. “We regret to inform you that your position is being eliminated and your employment will be terminated.”
Broadcom Begins VMware Layoffs
The VMware layoffs shouldn’t be a huge surprise, as sources close to Broadcom disclosed in August that the company was planning to cut its headcount. The sources stated that the cuts would affect non-engineering roles. A Broadcom spokesperson at the time characterized the information as “speculative and premature.” In addition, Broadcom’s management said in a mid-2022 town hall meeting that they wanted VMware to become “lean and flat.“
Furthermore, emails received by VMware employees in September warned that they would be presented with one of three choices: a job offer from Broadcom, a transitional offer, or severance. In late October, VMware began internal layoffs as the company likely foresaw a successful acquisition from China’s approval.
Broadcom has disclosed that it will reorganize VMware into four divisions, which are the Tanzu platform, the VMware Cloud Foundation, application networking and security (ANS), and software-defined edge units. As part of the acquisition, Broadcom has set a goal of more than doubling VMware’s EBITDA to $8.5 billion over the next three years.
Broadcom has also committed to investing capital into its new acquisition. CEO Hock Tan said that half of the investments will go towards research and development, while the other half will go towards executing VMware’s solutions and partner professional services.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
