Thread regarding VMware layoffs

It'll be very interesting to see if they pull a Citrix and claim that ARR projections from moving to subscription are great, when in reality you have 1 year renewals, 1 year "transition" customers who only migrated to subscription to buy time to figure out how to migrate to something else, or who didn't want to commit to stay a VMware customer for longer than 1 year at a time, and a lack of focus on customer adoption/success for the VVF/VCF bundles that many customers are being forced to, but that will have components that draw CIO attention as shelfware because they never get adopted or migrated to (AHEM - Aria SaaS customers who now are being told they have to take their deployments BACK to on-prem).

Interesting. I wonder if HT will get questions from Wall Street about AVGO book value, and outlook for the rest of the year when he reports the next quarter results.

"Prior assumptions are no longer valid — says every company that we have acquired. You guys really putting heads in the sands."

I'm in Finance, and I've seen the financial projections for 2024. This is different. The write-down costs for VMW are much greater than anything we've dealt with before. Very BIG!

I have listened to most of the AVGO earnings calls past 5 yrs and upcoming earnings call won’t be different. Synergy will be the title of the call and revenue will be revised higher.

Prior assumptions are no longer valid — says every company that we have acquired. You guys really putting heads in the sands. This is pretty straightforward for HT.

"Unfavorable loan rates are still much lower than the annualized returns of VMware acquisition."

Prior (to the acquisition) assumptions are no longer valid. Again, attend the upcoming AVGO quarterly calls and you'll discover the financial reality and balance sheet impact.

We don’t have a balance sheet problem … just look at the net income 14B every year.

Before VMware deal was announced, there was a presentation which listed the total debt/12 month ebitda for the past acquisitions LSI (4.4x), cBroadcom(3.8x), Symantec (3.6x). Current debt is about 40B. Let’s say we add another 40B. Guess what’s the multiple now - 80/20=4! That’s with just Broadcom ebitda not including VMware ebitda.

The strategy won’t work if the net income starts shrinking and that won’t happen as you already know how HT operates. Unfavorable loan rates are still much lower than the annualized returns of VMware acquisition.

"The point is current interest rates are much lower than the ROI annualized returns from VMware acquisition."

No, the point is that AVGO is now saddled with a huge debt to acquire VMW, and even after the sales of the EUC and CB business units they have a balance sheet problem.

However, AVGO can no longer get preferential loan rates from banks. So, they have to increasingly optimize VMW operating costs, well beyond the initial assessments. That's why we're currently seeing customer angst as AVGO cuts get deeper and deeper.

"We are no way near to that case."

We've already reached a breakpoint. Attend the upcoming AVGO quarterly calls as HT tries to rationalize the growing financial right-downs from the VMW acquisition. Stay tuned... as Wall Street analysts probe for the truth about the impact and outlook.

The point is current interest rates are much lower than the ROI annualized returns from VMware acquisition. The strategy works until there’s no company out there that can provide that opportunity. We are no way near to that case.

"We are the Borgcom. Resistance is futile." That's funny. The situation is getting worse...

All joking aside, in my chats with other employees, the Broadcom cult is being rejected. Most of the folks I'm meeting in the office are determined to leave as soon as possible. The promise of the benefits from deferred RSUs has not changed the negative perception of Broadcom managers, and their inability to manage the current VMW customer crisis.

We are the Borgcom. Lower your shields and surrender your ships. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us. Resistance is futile.

"Not sustainable eh? The strategy’s same for the past 15 years."

Exactly, that's the point. AVGO can't use that old strategy due to the higher cost of bank loans. HT may be an expert with his spreadsheet cost-cutting skills, but he still needs banks to fund future acquisitions. That approach isn't valid at current interest rates.

Meanwhile, when you consider the angry customer comments on the VMware groups in Reddit, it's becoming clear that Broadcom was unprepared to manage this acquisition. The Broadcom management team must act to reverse the huge ongoing support crisis.

If you're offended by 'clowns', then reconsider your loyalty to the AVGO borg. It's pitiful.

Add too that the anger within customers is not good. They are really mad.

Not sustainable eh? The strategy’s same for the past 15 years. What makes you think it’s not sustainable? You are special? We can revisit in 2 yrs. Finding the next right size company will be challenging. We’ll talk about it when it happens.

The acquisition strategy is a niche AVGO is doing an excellent job of mining. AVGO is balancing the revenue model of core lines of business (chips) with subscription revenues from fat cow acquisitions. VMware’s overlords know it is a difficult and lengthy process to unplug VMW.
Turns out Hyper-V really was the way to go.

nutanix is the way to go if you need a happy customer support.

OP is a clown.

What's not sustainable is a company with 300,000 employees and a revenue per employee of $5.00 bucks

Broadcom's model of low employee count, high margins IS THE FUTURE of IT companies because growth by innovation is STAGNANT.

We're already seeing layoff from almost every major tech vendor

Broadcom is genius. The stock will be $2000 and people will still be questioning the strategy.

I agree, HT plans to acquire more underperforming vendors to merely
cut their costs isn't a savvy tech vendor's growth strategy.
It's a simplistic PE financial manipulation playbook.

Hey, it works.

But, so did Enron and Bernie Madoff before they got caught red-handed.

I don't mean to imply that BC is doing anything illegal, but they may have underestimated with this acquisition. The motivation is the lowest I've ever seen it, and the anger has spurned so many people to be looking for jobs.

Last one out, turn off the lights.

It also assumes that you'll find an endless list of clueless customer CIOs

I'd take that bet!

Most of my customers are angry and looking for a way to get off vmware.

It also assumes that you'll find an endless list of clueless customer CIOs who will pay price increases for old software, while customer support declines at the same time.

That's also a high-risk gamble for all stakeholders - the acquired vendor employees holding RSUs, and AVGO common shareholders. Too many questionable assumptions.