Likely because they didn't want to. It was a vicious circle: they should have cut deep in management, stopped for a while to revisit the products and give quality and really focus on organic growth. That would have meant maybe losing money for a few years, having to change relationships to customers and rebuilding the power base created over many years.
I work in Support and I remember the obvious things you were seeing on a day to day basis about how product quality should have been implemented, and the ridiculous multiple manager structure, or the senseless product name change. Or what was being done to acquired companies, which is more or less what Broadcom has done to CA (maybe less ruthless, this is true). But nobody moved an inch, because having done so would have meant you couldn't justify immediate results.
In short: nobody thought about the long term, and everybody was focussed on immediate growth. Since you could not grow with quality, better products and good decisions in terms of what customers really needed and what products really mattered, you opted for the simple solution: cutting jobs every year, year after year, without touching the structure. The result was indeed that the inertia made you get the same earnings with less people, but you were becoming more and more inefficient, which was leading to more layoffs.
And as a CEO, you would never acknowledge you were not doing a good job, because your focus on speed and on getting immediate results was preventing you from doing that. That is why so many people were coming and going from the ELT: if things were not quite immediately right, you changed that member in the team, in the hope that the change would magically propagate down without touching anything, really.
In short: the company was managed and finally sold out out of shortsightedness. And what we are now seeing makes the future look really bleak. In one month all but mainframe has been totally dismantled. The ESD hope to be able to focus on the top clients, but nobody is explaining how this will be done, and the sensation is of absolute chaos, at least so far. But Broadcom showed yesterday finantial results, and the growth was spectacular.
That is the perverse logic of the market. The minute we lost focus on what really mattered: customers and long term growth, and concentrated in th short term and in make up to make everybody believe in ethernal growth, we were doomed.