IRVINE, Calif.--Hit hard by the communications downturn, Broadcom Corp. on Wednesday reportedly handed pink slips to 10% of its workforce, or about 500 employees, according to an e-mail newsletter from The Linley Group, a consulting and market research firm in Mountain View, Calif.
The action, part of a cost-cutting program announced in October, is also said to have "completely wiped out" Broadcom's voice-enabled packet processor, security IC, and SONET/SDH chip operations, according to the newsletter, which was issued late on Thursday.
The move also follows a string of losses and tough times for the once high-flying communications chip maker. Irvine-based Broadcom apparently did not issue a press release on the cost-cutting measures.
"Although Broadcom will not confirm the size of the layoffs or what groups are affected, sources indicate that the former Silicon Spice, Newport Networks, and BlueSteel groups were almost completely wiped out, with some trimming occurring in other areas of the company," according to the newsletter. "The total size of the layoff is estimated to be 500 people, roughly in line with the company's goal of reducing operating expenses by 10% to 12%."
BlueSteel, Newport, and Silicon Spice were among the plethora of companies that Broadcom acquired during the communications boom in the late 1990s and early 2000 time frame. Broadcom's Silicon Spice unit developed voice-enabled packet-processors, Newport made SONET/SDH chips, and BlueSteel sold security chips.
Analysts were not surprised by the moves. "It is no surprise that the Silicon Spice and Newport groups were targeted, as both were focused on the moribund carrier space, and neither group had gained much market presence," according to the newsletter.
"But BlueSteel, which focuses on security processors, has been one of Broadcom's more successful acquisitions. Since being acquired in March 2000, the team has produced several strongproducts, and Broadcom has become one of the leading security-processor vendors, particularly in the SSL segment," it said.
A representative from The Linley Group apparently called a Broadcom spokesman, who said that the company remains committed to the security-processor market.
"We suspect, however, that the cutbacks will hamper future
development. Instead, the company may move more quickly toward integrating security into its other products rather than producing standalone security chips," according to the newsletter.