Broadcom Lays Off 1,100 Employees After Brocade Merger

Broadcom said it had laid off about 1,100 employees across its businesses to cut costs after its merger with Brocade Communications Systems.

The chipmaker completed its $5.5 billion (roughly Rs. 37,400 crores) acquisition of network gear maker Brocade in November.

Broadcom is further evaluating its resources and may terminate additional positions, it said in a regulatory filing.

Broadcom said it had incurred $143 million (roughly Rs. 972 crores) in restructuring charges, primarily employee termination costs, during the first two quarters of its fiscal 2018.

The company is expected to pay majority of its employee termination costs in the third quarter.

Broadcom last week announced that its quarterly profit beat Wall Street estimates as demand for its networking chips and storage solutions from data centres more than made up for weakness in its wireless business.

The company said it expects wireless revenue to be flat or slightly down in the third quarter, from the second quarter, as growth in demand from a large North American smartphone customer will be offset by a decline in shipments to a Korean customer.

Most analysts believe that the North American customer is Apple, which accounted for a fifth of Broadcom's revenue last year, and the South Korean customer is Samsung Electronics.

However, Broadcom expects demand to remain healthy from cloud data centres and enterprise IT, Chief Executive Officer Hock Tan said on a call with analyst.

Broadcom, which was a US company until it was bought in 2016 by Singapore's Avago, redomiciled in April, weeks after US President Donald Trump blocked its $117 billion (roughly Rs. 7.6 lakh crores) offer to buy Qualcomm on national security grounds.

© Thomson Reuters 2018