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Broadcom Cuts 2,500 jobs

Cellular exit drives 20% layoffs
7/22/2014 06:30 PM EDT
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docdivakar
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Re: Broadcom Cuts 2,500 jobs
docdivakar   7/22/2014 7:00:14 PM
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Not surprising, given their announcement two months ago. I hope due consideration was given to these folks in other business units before being let go.

Broadcom can definitely focus on datacenter market and consolidate its position. There is still opportunity for further lowering power consumption & cost reduction for 10Gig PHY's, in my opinion.

MP Divakar

Sheetal.Pandey
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Re: Broadcom Cuts 2,500 jobs
Sheetal.Pandey   7/23/2014 2:37:28 AM
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Cutting 2,500 jobs that's a very big number. HOpe the employees were given assistance in placement elsewhere and sufficient time was also given. Layoffs affects a person socially and emotionally. Management should avoid it to the extent possible.

cd2012
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Re: Broadcom Cuts 2,500 jobs
cd2012   7/23/2014 7:16:24 AM
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For one thing, they won't be paid out their vacation.  Broadcom changed the vacation policy from an accrued entitlement appearing on one's paycheck to "you have as much as you want, just ask your boss" (which in general turns out to be a bad deal).

 

rick merritt
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Re: Broadcom Cuts 2,500 jobs
rick merritt   7/23/2014 11:34:11 AM
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@cd2012: Are you sure about this because it doesn't sound legal? Last I knew in Calif. employers even have to carry over unused vake into the next year.

garydpdx
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Re: Unlimited Vacation
garydpdx   7/23/2014 12:36:43 PM
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I definitely recall reading that in transitioning to an unlimited vacation policy, your accrued rollover from last year is paid out as cash (income) or can be put into your 401K exempt from the annual limit.

(Actually, expiring vacation rollover from the year before as well as last year could be diverted to your 401K exempt from the annual limit.  The problem is that a lot of companies know about it but don't implement it!)

The advantage of unlimited vacation for employers is that there is not rollover to track, and no payout liability if the employee leaves.

cd2012
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Re: Broadcom Cuts 2,500 jobs
cd2012   7/24/2014 7:27:08 AM
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hi RM,

When I worked there (Irvine) and they changed the policy in 2011, the company paid out the remaining vacation owed to employees, as they are legally required to do.  As far as I know, vacation is currently untracked, which means no payout when you quit or are laid off.


Netflix started this policy: http://www.slideshare.net/reed2001/culture-1798664, p. 66.

 

 

 

krisi
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Re: Broadcom Cuts 2,500 jobs
krisi   7/24/2014 7:11:42 PM
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is this legal? (not tracking vacation time)

rick merritt
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Tough choices, murky history
rick merritt   7/23/2014 11:39:21 AM
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Horrible as this is for the 2,500 people involved I am giving B'com execs some credit for taking fast action after seeing the baseband biz was sucking profits and endangering the company.

That said I'd like to get more insight into the history here. How did B'com go in--what 18 months?-- from buying into the Renesas baseband biz, racing toward an LTE chip, then cutting the biz and 2,500 people?

Kinnar
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Re: Tough choices, murky history
Kinnar   7/23/2014 2:19:29 PM
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2500 is a very big number, so much amount of trained and qualified technical persons getting laid-off. Broadcom is doing good in wireless and Ethernet business market, may be they would have used this qualified manpower in this area instead of laying them off. There are many unattended markets are still there on the entire globe. Like 4G deployment by Reliance in India. 

JimMcGregor
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Re: Tough choices, murky history
JimMcGregor   7/23/2014 2:39:41 PM
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Unfortunetly, we are likely to see many more announcements like this throughout the end of the year. Growth rates in many segments is slowing and IoT and wearables are unlikley to drive significant gorwth in the short-term. Even when growth rates do pick up in these segments, the trend toward slimmer margins in consumer electronics will continue. As a result, many tech companies are re-evalauting their strategies, dropping some initiatives, and slimming down.

Kinnar
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Re: Tough choices, murky history
Kinnar   7/23/2014 3:10:10 PM
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You are right but IoT and Wearable does require conventional electronic components as well as connectivity toolset which is a main product of Broadcom, so it is still there area of expertise with some alterations. 

rick merritt
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Re: Tough choices, murky history
rick merritt   7/23/2014 6:12:32 PM
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@JimMcGregor: Thanks for chiming in...who would you rank as the 4-5 most likely to have cuts this year?

Matthieu Wipliez
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Re: Tough choices, murky history
Matthieu Wipliez   7/23/2014 4:44:58 PM
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The race to ever lower costs combined with the search for maximum profits is bound to lead to this (and the poorer the company management the higher the probability).

Broadcom must have lost a ton of money in the meantime... Buying Renesas' assets only for letting people go less than 2 years later, I wonder if they even had time to design and sell one chip. My guess would be that they overestimated the profits they could make, while underestimating both the time needed and the money it would take. What was the deal with Renesas exactly? Were they forced to hire all 2,500 people?

rick merritt
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Re: Tough choices, murky history
rick merritt   7/23/2014 6:15:53 PM
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@Matthieu and @Junko:  Wow, I went back and looked at Junko's story and it hasn't even been a full year since Broadcom acquired Renesas Mobile!

See http://www.eetimes.com/document.asp?doc_id=1319399

 

JimMcGregor
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Re: Tough choices, murky history
JimMcGregor   7/23/2014 8:22:00 PM
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You are correct Rick, this was a bad decision from the start. And in regards to which companies will likely be downsizing, start with the companies that have had changes in management over the past year and go from there. While many of the companies will emerge stronger and more focused, it will have an impact on many throughout the industry.

scud
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Re: Tough choices, murky history
scud   7/24/2014 12:56:50 PM
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Before acquiring Renesas, there were large layoffs on both sides - Broadcom as well as Renesas - to the tune of 30 to 40%. The remaining team was legacy Broadcom and the acquired Renesas. Broadcom decided to sell its modem business around 8 months after acquiring Renesas. In those 8 months, there were a couple of phone launches (carrying on Renesas legacy) with a big player, and a little earning (but not a loss). That was enough to close it. Probably a grocery store takes more than 8 months to recover initial investments ....

junko.yoshida
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Re: Tough choices, murky history
junko.yoshida   7/23/2014 5:43:48 PM
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I think Will Strauss' comments sum it up. Broadcom, after its acquisition of Renesas Mobile's team last summer, hit the same wall the Japanese chip company ran into. When the smartphone market is dominated by two giant players (Samsung and Apple) and if you haven't won either sockets, you have NOWHERE else to go. There are no large enough customers to sustain your business. After all, that's the same problem that ST-Ericsson ran into, too.

 

AZskibum
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Re: Tough choices, murky history
AZskibum   7/24/2014 1:31:07 PM
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A painful but smart decision. As you stated, if you're not in Samsung or Apple, the rest of the sockets out there don't add up to enough to make a viable baseband business. I hope the affected engineers land on their feet soon.

hb11us
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Re: Tough choices, murky history
hb11us   7/24/2014 2:31:12 PM
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Next thing we hear that BroadComm exited the WiFi buziness (All basband supplier are working hard to package their own design with thier own WiFi solutions).

This will be their worst decision ever, driven mostly by Wall Street banker !!!

krisi
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Re: Tough choices, murky history
krisi   7/24/2014 7:13:03 PM
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I agree...this doesn't look like a bright start to new businesses like IoT...they might have to exit other markets too before they become stable

docdivakar
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Re: Tough choices, murky history
docdivakar   7/25/2014 10:42:58 AM
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@kris: it looks to me that Broadcom may have made the right decision, considering the tough market environment in the mobile business. Qualcomm's stock took a beating yesterday, mostly because it could not collect its royalties to the fullest in China and cited softness for the rest of the year.

Broadcom has a solid position in the datacenter infrastructure market and more attention should go there in my opinion.

MP Divakar

krisi
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Re: Tough choices, murky history
krisi   7/25/2014 11:55:15 AM
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I see, I don't follow this market closely...if Broadcome and Qualcomm don't do that well who is?...players in China? companies that refuse to pay royalties?

rick merritt
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Will Strauss lends perspective
rick merritt   7/23/2014 11:44:38 AM
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Late last night I got an email in from Will Strauss of market watcher Forward Concepts in Tempe, Ariz. with this perspective:

"Unfortunately, Broadcom found that there are no big LTE modem sockets to be had since Apple (via Qualcomm) and Samsung (with its own LTE modem now...based on CEVA) have most of the smartphone market.  All the other LTE modem sockets (mostly 3rd-world smartphones) are being filled with Marvell, Spreadtrum, Nvidia, Intel, ZTE, Huawei (and soon, MediaTek) LTE modems.

"The volumes of those non-Qualcomm and non-Samsung sockets are small, but hey, you have to start somewhere even its in emerging BRIC countries. The lesson is that those new LTE modem vendors will have to look for 3rd-world sockets that are moving from 3G to 4G.  For example, Nvidia is in LTE smartphone sockets in France and South America...something that we don't see from a U.S. standpoint.

"MediaTek is the exception since it's nicely tied into the China cellphone market already. When it finally ships its LTE modem (they claim to be in devices by the end of this year), they will get a big jump over everyone else in China (slugging it out with Qualcomm who knows MediaTek is coming and QCOM is dropping its low-end LTE chips by 10%.

"In reality, Broadcom simply couldn't afford the 1,000+ engineers they had working on a cellular modem business slice that was too small to support them."

--Thanks, Will!

Sheetal.Pandey
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Re: Will Strauss lends perspective
Sheetal.Pandey   7/24/2014 2:01:40 AM
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Its understod that when business doesnot do well or cost cutting is in action, employee salaries or layoffs seems to be the first option to reduce direct costs. Noone can deny that. But there should be placement assistance available whether through direct HR or placement companies or business associates. And how about the severence package, are these engineers getting good package to mage for few months...

Hare Rama
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Re: Will Strauss lends perspective
Hare Rama   7/24/2014 2:17:21 AM
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@Sheetal.Pandey

As far as India is concerned, severence package announced is good enough and is also linked to number of years of experience at Broadcom. Also there is tieup with one of the major job consulatancy firm to assist the outgoing employees.

elctrnx_lyf
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Re: Will Strauss lends perspective
elctrnx_lyf   7/24/2014 4:42:30 AM
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Once it becomes difficult to sell, it becomes hard to maintain the highly paid employees and the infrastructure. So going lean and concentrate on where you can win will become more and more essential.

rick merritt
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Wall Street responds positively
rick merritt   7/23/2014 12:03:48 PM
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I got a couple Wall Street reports in my inbox following the B'com news. Neither one mentions the layoffs and both are positive. Wall Street tends to reward CEOs who cut people and costs.

Here's a snippet from one report. It's by Ross Seymore of Deutsche Bank Equity Research:

"Looking forward, we expect the company's core business to grow faster than the semi industry, its connectivity business to be more resilient than feared, and its margins/cash flow to increase with capital returns to investors rising. We therefore reiterate our Buy and tweak our P/T up to $47."

Thanks, Ross!

 

pseudoid
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Broadcom has got its plate full
pseudoid   7/24/2014 11:37:30 AM
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This RIF was announced early in June as the report indicates but a 20% chunck must be a sizable number of very specialized US engineers being impacted.

The report also indicates that they are planning on consolidating 18 (international) locations and currently they are negotiating a few campus options for this effort.  It is intriguing that the report is sourced from San Jose, CA as I had thought that their HQ' were in SoCal  (Orange County, CA).

My understanding is that their profits were riding in the coattails of Apple while ignoring whole Android market.  I assume Qualcomm is doing a better job, especially now that MediaTek is thinking of opening up a site in SanDiego region to better compete.

Since BroadCom is getting out of the baseband (BaseCom?) business, they plan to re-direct more of their tech-energy into the InternetOfThings sector!

Mr. Brightside
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Scott McGregor must go
Mr. Brightside   7/25/2014 12:43:50 AM
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For nearly a decade this CEO has been drawing one of the highest salaries in the Fortune 500 but what is there to show for it? Billions in squandered income, a stock price that hasn't budged since he took office, one failed acquisition after another. And now the coup de grace: complete dissolution of his prized Mobile business unit without reaping one red cent for years of expensive R&D, and 2500 engineers on the street.

The Board should be hanging their heads in shame. Throw the bums out, every last one of them.

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