Broadcom Resumes Cost-Cutting Efforts After Failed Qualcomm Bid

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Broadcom is resuming its aggressive cost-cutting efforts following an unsuccessful bid to acquire Qualcomm earlier this year, having terminated some 1,100 employees of former Brocade Communications Systems, a San Jose-based data and networking solutions firm which it acquired for $5.5 billion in November, approximately a year after agreeing to combine. The move comes directly from Broadcom's business strategy playbook that allowed it to increase its market cap by more than eight times over the last half a decade, with its Friday afternoon valuation sitting above $110 billion; the company drives a hard bargain with major mergers and acquisitions, largely absorbs its new assets, and eliminates cost where possible in order to accelerate its returns, counting on overhead savings to make such moves worth it.

In a Thursday filing with the United States Securities and Exchange Commission, Broadcom revealed it's still reviewing a number of Brocade's assets and positions, adding that further terminations and divestments are a near-term possibility. The company estimates its post-acquisition restructuring expenses amounted to some $143 million so far, with the majority of that sum being attributed to layoff costs. Most of the terminated employees will receive their compensation packages in the third quarter of the year, as per the same filing. Broadcom recently relocated its corporate headquarters from Singapore to San Jose, having partially done so to accelerate Washington's review of its attempted hostile takeover of Qualcomm, though President Trump was still advised to block the deal from happening on national security grounds and has ended up doing precisely that this March.

Broadcom was proposing the largest merger in the history of the technology industry, with its peak bid amounting to $121 billion, mostly in cash. Despite its failure to seize control of Qualcomm earlier this year, the firm is expected to continue pursuing its aggressive M&A strategy in the near future, with that growth approach so far proving largely successful under the leadership of CEO Hock E. Tan.

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