AVGO earnings

If you haven't seen it, read the Broadcom earnings transcript. There is specific confirmation from Hock Tan that:

1) The focus will not be selling into new accounts

2) The focus will be on mainframe, and then pulling into other solutions

3) "growth" will be based upon ELAs and all you can eat agreements, just like CA many years ago

4) There will be massive cost takeout from the CA business, to the point of running it for $900 million cost a year.

If you want a comparison, CA's last full year statement had OpEx at $3.1 billion. So basically taking out 70% of the cost.

Facilities, etc. don't make up much of that, so the bulk has to be people. And particularly SG&A. So salespeople, as you aren't paid to do anything more than renewals and re-rolling ELAs. I hope you trade in that Mercedes for a Camry.

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We can say whatever we want but the broadcom q4 financial results are spectacular.

@WvJT3DG-1yrz Good back of the napkin.

What you haven’t factored in is more labor arbitrage. US numbers will continue to shrink while staffing increases in Malaysia, India and Prague.

While 2800 in the US weren’t termed day 1, that number will fall through voluntary and involuntary attrition. Replacements will mainly be hired outside the US or outsourced.

When Octane says $900 million that’s a number he is publicly comfortable with. I wouldn’t be surprised if he pushes it lower and then “surprises” Wall St.

Anyone know details about welcome package for STAY employees? From earnings call: "We are implementing a special broad-based, multi-year equity award program for our employees, including our new CA employees. Each multi-year equity award will vest on the same basis as four annual equity grants made on March 15th of each year, beginning in 2019."

Is it a separate RSU program in addition to the yearly RSU and bonus programs? Something similar mentioned in thread https://www.thelayoff.com/t/WhxgGlk

Back of napkin calculation..

Revenue 4.25

Less 28% tax

Less $300 m fcf

=2.76b

Divided by 11k employees

Cost per employee 250k

Given all the most highly paid have been term. Reduced expenses, travel, office consolidation. This translates easily to 200k per employee, no??

900m / 200k =4500 employees

Less the 2800 NA that were not term on day one. Leaving 1700 for the rest of the world where the costs there are easily not 200k per employee more like 100k on average (bulk coming from India. Seriously how much does a senior engineer in itc earn ?? 2m rupee is not even $30k).

So taken another way....

2800 * 200k = $560m us cost

900m - 560m = $340m non us cost

Let’s suppose the average cost per employee in the rest of the world is $125k when the bulk is in India costing significantly less.

340m / 125k = 2720 employee

Grand total 5520 (2800+2720)

After services is cast away we might very well be inline. Any layoffs will be the small variety we have been accustomed to with CA yearly spring cleaning. Under octane I expect them to occur in late fall

Yes, 900 million in Opex translates to about 3000 employees in end state. Even with Veracode, Services and transition staff, that doesn’t get to the target. Bring on the next round of layoffs in Q3 2019!

this has been known from the beginning and even was used to fuel rumors about the teams getting shutdown, thanks for sharin tho

Thread regarding CA Technologies (CA Inc.) layoffs

AVGO earnings

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