VMware employees in end-user computing and security believe Broadcom may divest its units after closing $61 billion deal

VMware employees in end-user computing and security believe Broadcom may divest its units after closing $61 billion deal

  • Broadcom plans to acquire VMware for $61 billion and are preparing to close the deal this year.
  • Carbon Black end-user computing and security workers think their units could be spun off or sold.
  • Broadcom has a history of selling some business units in its acquisitions, such as Symantec.

Broadcom’s impending $61 billion acquisition of VMware has led employees of two Carbon Black end-user computing and security units to speculate that their units could be spun off or sold.

VMware and Broadcom announced the deal last year and the closing date was recently pushed back from May to, at the earliest, late August or until Thanksgiving as regulators scrutinize the deal, VMware said in a recent Securities and Exchange Filing in Committee.

Broadcom has a history of slicing and dicing the targets of its major acquisitions. For example, after Broadcom’s $18.9 billion acquisition of CA Technologies in 2018, it sold its Veracode product to private equity firm Thoma Bravo. Similarly, after its $10.7 billion purchase of cybersecurity giant Symantec in 2019, it sold the company’s cybersecurity services business to Accenture and the business consulting team to HCL Technologies.

“We continue to expect the deal to close in Broadcom’s fiscal 2023,” a VMware spokesperson said in a statement. “In the meantime, we continue to operate as a standalone company, supporting our customers and partners and offering services across our businesses, aligned with our business goals and our transformation into a subscription and SaaS business.”

The future of the EUC

Employees at the End User Processing Unit said they saw several clues that led them to wonder about its future. The EUC unit creates products like Horizon and Workspace One that allow users to access their business applications from anywhere via the cloud.

During an EUC team meeting in November, the unit’s head, Rob Ruelas, acknowledged that the unit wasn’t important to Broadcom and dodged a question about whether the group would stay with VMware, a former employee said.

“If the head of a division says he doesn’t know, that means something is going to happen,” the former employee said.

Additionally, the EUC organizations have recently reorganized to be under EUC leaders, rather than integrated with other VMware teams under VMware leaders. Previously, the EUC Solutions Engineering team was under VMware Director of Digital Solutions Engineering, John Ryan, and now reports to Sarah Swatman, Senior Director of Digital Workspace, who is a part of EUC.

EUC’s sales team was previously under Angus McGeachie, senior director of digital sales at VMware who left the company in July. It is now under Chris Rottner, EUC’s director of digital sales in Europe, the Middle East and Africa.

The former employee said it appeared that the company was retooling the EUC unit to make it more independent from the rest of the company.

And if EUC stays with Broadcom, there could be a culture clash when it comes to remote working.

“One of the things that annoys a lot of EUC, especially their vendors, is how you know you’re getting here and you talk about customers and users asking to work remotely and work from home,” said one employee. “How do you ask that when the company you work for now, Broadcom, returns to office?”

The future of Carbon Black

Three employees told Insider that because Carbon Black, the VMware cybersecurity company, bought in 2019 for $2.1 billion, offered products that competed with those of Symantec, they wondered if their unit could be turned into a company independent or sold.

One reason for their belief is that Carbon Black’s operations have not yet fully integrated with VMware. After the Carbon Black acquisition, integration with VMware should have taken a year or two. But it’s “kind of been in limbo,” one employee said.

While the product has been integrated to work with VMware’s flagship products such as vSphere, not all of Carbon Black’s businesses have been merged with the parent company. For example, this unit still has separate Salesforce and support systems from the rest of the company, the employee added.

“I think it’s fair to say it’s been a slower process than we expected,” that employee said.

“For me, the writing is on the wall,” another employee said. “They could sell Carbon Black because they have Symantec, which is a duplicate.”

However, other Carbon Black employees are taking a wait-and-see attitude.

“My feelings are that I’m giving them the benefit of the doubt,” said a Carbon Black employee. “There is a possibility that we could be spun off. There is a possibility that we could be sold to another company. There is a possibility that we could stay with Broadcom.”

If Broadcom retains the security unit, these employees fear that replication with Symantec could lead to layoffs for the unit.

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