VMware Layoffs 2023 may be triggered due to acquisition by Broadcom the semi conductor giant. It maybe ‘strictly business’ however ultimately its employees who are thrown off from their duties. Layoffs in the tech industry seem to have become a new normal for sure.
The acquisition of VMware has been a topic of intense scrutiny and discussion since its announcement in May 2022. The deal, initially valued at $61 billion, has seen various developments, including regulatory hurdles, market reactions, and implications for employees. This article aims to provide a detailed analysis of the acquisition, drawing from multiple sources.
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Details about the Broadcom VMware Deal
Broadcom announced its deal with via a post on their official website regarding the deal in 2022. You can go through the details regarding the same on the link. Below is the summary for the same.
- Initial Valuation: The deal was initially valued at $61 billion, comprising both cash and stock options for shareholders.
- Updated Valuation: Recent reports suggest the deal’s value has escalated to around $69 billion.
- Shareholder Options: VMware shareholders can opt for either $142.50 in cash or 0.2520 shares of Broadcom common stock for each share they own.
- Debt Assumption: Broadcom will assume $8 billion of VMware’s net debt.
- Revenue Projections: Post-acquisition, Broadcom aims for a pro forma revenue of more than $40 billion, including 49% from software revenue.
- EBITDA: Broadcom targets adding approximately $8.5 billion of pro forma EBITDA from the acquisition within three years post-closing.
Regulatory Approvals for the deal
- International Approvals: The deal has received conditional approvals from the European Union, the U.K.’s Competition and Markets Authority, Australia, Brazil, Canada, South Africa, and Taiwan.
- China’s Stance: Beijing is considering delaying its approval, especially after the U.S. introduced tougher chip controls. This has led to a 7.5% fall in VMware’s stock in premarket trading. This is one of the areas that kind of has raised suspicions on whether the deal will go through or not. Unless the approvals come the deal might completely be off the table. Its kind of tricky to say what the outcome would be as China has been slapped constantly with sanctions from the West. Its a ripe opportunity to hit right back.
VMWare Layoffs to happen soon ?
Just to give you a bit of context any form of merger or acquisition is followed by a series of layoffs it always generally happen.
I have added an article regarding a pre pandemic merger just to justify the point. This article mentions that AT&T’s acquisition of Time Warner resulted in a $400 million payout for Time Warner’s CEO, while 45,000 workers lost their jobs. Don’t be surprised by this just an FYI.
| Acquiring Company | Acquired Company | Year | Estimated Layoffs |
|---|---|---|---|
| AT&T | Time Warner | 2018 | 45,000 |
| Disney | 21st Century Fox | 2019 | 4,000 |
| Microsoft | 2016 | 960 | |
| Verizon | Yahoo | 2017 | 2,100 |
| HP | Compaq | 2002 | 15,000 |
- Initial Layoffs: Multiple reports suggest that VMware has started preparing laying off employees as the acquisition nears its final stages. I have seen a lot of LinkedIn posts in the last 2 weeks regarding the uncertainty. Its going to happen.
- Broadcom’s Plans: Broadcom is planning significant job cuts post acquisition, particularly in non-tech department. However this doesn’t mean that tech roles won’t be slashed. We saw it with LinkedIn. We saw it with Epic as well. It always happens company wide.
Industry Implications
- Strategic Fit: The acquisition is seen as a significant diversification for Broadcom, which is primarily a semiconductor company.
- Market Position: Critics question the synergy between a semiconductor and a software company, while proponents see it as a game-changing move.
Cybersecurity Implications
Lessons from Symantec
Broadcom’s past experience with acquiring Symantec wasn’t smooth. After the deal, a lot of customers and employees left Symantec. This raises questions about what could happen to VMware’s security business after Broadcom takes over. Will they lose customers and staff like Symantec did? This is a big concern for companies that rely on VMware for their security needs.
Financial Stakes in Security
Both the companies are big players in the cybersecurity market. Symantec’s business made $1.61 billion in the last year they reported. VMware’s security business is even bigger, bringing in about $2 billion a year. These are not small numbers, and they show that both companies have a lot at stake in making sure their security products do well.
Future of Security Products
VMware has been actively expanding its security offerings, including endpoint detection and cloud security. If Broadcom takes the same approach as it did with Symantec, we might see a shift in focus or even a reduction in investment in these areas. This could affect the quality and range of security solutions available to customers.
Industry Impact
The deal could also shake up the cybersecurity industry. If Broadcom changes VMware’s security offerings, other companies might step in to fill the gap. On the other hand, a successful integration could create a monopoly in cybersecurity solutions, affecting competitors and possibly leading to more consolidation in the industry.
Conclusion
The Broadcom-VMware deal is complicated and affects many people and companies. Whether China (CCP) says yes or no to the deal is a big deal and could stop it from happening. The deal is worth a lot of money and has already led to job cuts and changes in the stock market. The employees have been living in fear of the fallout for more than a year. Hope this ends soon. Either way the deal goes through or not they will be the one sacrificed in order to bump up the stock price which has shown significant volatility in last few months. The people who help build this empire shall be sacrificed either way.