Brocade Communications will shed hundreds of employees before its acquisition by Broadcom, and one source with close ties to the company said the feeling of uncertainty in the company is "palpable."
The San Jose, Calif.-based vendor recently implemented a voluntary separation plan for employees in the U.S. and India to reduce Brocade's operating expense structure, according to a Brocade filing this month with the U.S. Securities and Exchange Commission. A total of 230 employees based in the U.S. have accepted the plan and are set to leave the vendor during the company's current fourth fiscal quarter, which ends Oct. 28.
In addition, Brocade is laying off 96 employees based in San Jose effective in October, according to an employment report by the Employment Development Department for the State of California.
Brocade said in the filing it expects to make cash expenditures of $23 million to $26 million in its fourth quarter for severance and other employee termination costs associated with the reduction plan.
In an email to CRN, Brocade said the workforce reduction is in response "to the business conditions created by the previously announced delay in the closing of Broadcom's expected acquisition of Brocade."
"The main goals of the reduction in force were to reduce uncertainty for employees who may have otherwise expected to be terminated at the closing of Broadcom-Brocade transaction and eliminate roles with lessened business criticality or workload given the delayed closing," said Brocade to CRN.
Broadcom's $5.9 billion blockbuster acquisition of Brocade hit a major hurdle in July that has delayed the purchase for months. The acquisition, which was first unveiled in November, was set to be completed by Aug. 1. However, the Committee on Foreign Investment in the United States (CFIUS) halted the process to review the deal further, raising the remote possibility that CFIUS could dissolve the deal altogether.
Top Brocade executives have also been leaving the vendor, including former channel chief Sandra Glaser Cheek, who left last month for a new role at Ciena, as well as Brocade's former EMEA business leader, Marcus Jewell, who recently departed for a similar role at Juniper Networks. Tuesday, Brocade's vice president of corporate marketing, Vasu Jakkal, jumped ship to FireEye to become the security vendor's new chief marketing officer.
As of Aug. 11, Brocade had a headcount of approximately 4,600 employees, down from a total of 5,948 employees it had during its third quarter 2016, according to a Brocade 8-K SEC filing in August.
Brocade said the 230 U.S. employees it was letting go were deemed "not necessary to completing day-to-day operations and who have not received employment letters from a Brocade buyer."