Broadcom Closes Deal, Cuts VMware Four Ways As Raghuram Steps Aside
Former VMware CEO Raghu Raghuram bid farewell to colleagues and said he is now a technical advisor to Hock Tan. VMware channel chief Ricky Cooper is now Broadcom’s vice president of OEM sales, reporting to Tan.
Broadcom finally owns VMware.
“We are excited to welcome VMware to Broadcom and bring together our engineering-first, innovation-centric teams as we take another important step forward in building the world’s leading infrastructure technology company,” Broadcom President and CEO Hock Tan said in a statement Wednesday announcing the close of the deal, in which Broadcom is paying $61 billion in cash and stock for VMware and taking on $8 billion of its debt.
The moment San Jose, Calif.-based Broadcom closed the acquisition, it divided VMware into four pieces, with a general manager for each.
“Broadcom has a strong track record of successfully integrating and growing companies we acquire, and now that the transaction is closed, we can hit the ground running. Going forward, the VMware business will operate as the following divisions of Broadcom,” Tan wrote in an email shared with Broadcom employees.
The divisions are VMware Cloud Foundation; Tanzu; Software-Defined Edge; and Application Networking and Security.
With the close of the acquisition, several VMware executives are taking on new roles.
Former VMware CEO Raghu Raghuram does not have an executive position at Broadcom. He will instead act as a technical advisor “to assist me with the transition,” Tan wrote.
Raghuram joined VMware as director of product management in 2003. He assumed the CEO mantle from Pat Gelsinger in June 2021 and stewarded VMware through its spin-out that November from Dell Technologies into an independent entity and then, not long after, through its acquisition by Broadcom.
“I plan to take a short break, rejuvenate, and then find a new and impactful mission into which I can pour my energy and passion. I will also continue my association with VMware as a strategic advisor to Hock Tan,” Raghuram wrote in a post on LinkedIn. “I have no doubt that our paths will cross again. Until then, thank you, goodbye and good health.”
On the channel front, VMware channel chief Ricky Cooper, head of VMware’s worldwide partner and commercial organization, has become Broadcom’s vice president of OEM sales. In that role, he will oversee partner incentive programs across the four new divisions and report to Tan, according to a source.
It appears the channel will be managed across the organization by Cooper as well as Broadcom channel chief Cynthia Loyd, who was named vice president of commercial partner sales. Previously her title was vice president, global partners, global enterprise and commercial sales.
A Broadcom spokesperson did not provide further details on the company’s channel strategy going forward. A VMware spokesperson refered questions to public statements.
Multiple VMware partners told CRN they had yet to hear from their account managers about what the changes to leadership and reporting structure could mean for the channel.
“There is so much ‘FUD (fear, uncertainty and doubt)’ around this one related to price increases and support,” one large partner said. “I hope that they are going to come out of the gate to dispel all the rumors we are hearing.”
Another said they also had not heard from their VMware account manager.
“Still too soon to tell,” the partner said.
In a video interview posted to Broadcom’s website Wednesday, Tan said VMware had several types of partneships: vendor partners, global systems integrators, value added resellers, managed service providers as well as distributors.
“We see different categories of partner, and we will focus and optimize their value into an expanded ecosystem,” Tan said in the video.
Tan said Broadcom wants to recruit more VARs that will invest in delivering services and building technology practices around deploying and operating VMware products.
“The biggest things that we’ll do upon the combination of these two companies are two words: focus and execution,” he said. “The true innovation will come when you add services, a catalog of very rich services, on top of this base of this virtual stack of software that virtualizes the environment.”
Forrester Principal Analyst Tracy Woo said the changes that have been announced to VMware’s leadership and reporting structure are within expectations, and thinks more could come.
“These leadership alignments make sense,” she said. “They are placing them with their respective business unit leads. I would expect that Broadcom will want to bring in their own leadership team.“
Krish Prasad, the senior vice president and general manager, VMware Cloud Foundation Division, at Broadcom was previously in charge of VMware’s Cloud Platform Business.
Purnima Padmanabhan, the new vice president and general manager of the Tanzu division, was senior vice president and general manager of modern apps and cloud management.
Sanjay Uppal, vice president and general manager of Broadcom’s software defined edge division, was general manager of VMware’s service provider and edge business.
Umesh Mahajan, who is is Broadcom’s general manager of application networking and security division, was previously in charge of VMware’s networking and security business, which includes the NSX software-defined network virtualization platform.
VMware’s Jason Rolleston will continue as vice president and general manager of Carbon Black, and Shankar Iyer as vice president and general manager for VMware’s End-User Computing. However Tan said Broadcom will “review strategic alternatives” for the two businesses.
The deal took 18 months to complete from the May 26, 2022 announcement, through to closing Wednesday morning. Along the way it passed tough global regulatory hurdles, a second-request investigation by the US Federal Trade Commission, a Phase 2 inquiry at the European Commission, a deep investigation at the UK’s Competition and Markets Authority, and a late approval, with conditions by South Korea.
Tan insisted the deal would close by Oct. 30, but it was China that ultimately set the deadline. Beijing withheld its approval of the deal as it inched closer to November 26, at which point either Broadcom or VMware could walk away. Wall Street analysts told CRN that it was unlikely that either side would abandon the mereger, but it also wasn’t clear what the course forward was if China did not relent, other than to wait.
Tuesday Tan announced that China had green-lit the aquisition.
VMware stock stopped trading with the close of the merger.
Broadcom stock had been trading as high as $999.50 on Monday but shares ended Wednesday at $972.00 down $9.20.