Broadcom will fire a third of Qualcomm staff

Comment: This is not a merger it is an asset strip

It is starting to look like Broadcom’s take over of Qualcomm will be less of a merger and more of an asset strip.

While most people associate Broadcom with Wi-Fi and Bluetooth chipsets and a few processors,  But Broadcom is a company called Avago which is a spin-off of Hewlett-Packard. In recent years it has been buying and asset stripping companies. This has resulted in excellent financial performance, but the outfit is a tech equivalent fo a car wrecker.

The company is run by “finance geek” Hock Tan. Tan has confirmed that life will be bleak for Qualcomm workers if it takes over and a third of them will be made redundant.

Broadcom is famous for taking over and removing a third of the workers of the companies it takes over. It is an automatic figure that is fixed in Tan’s head. In the last four years and five acquisitions by Broadcom, around 30 percent of the employees of the five companies bought – some 5000 people – have lost their jobs. It includes figures for business units which are sold off.

Tan said he expects its Brocade acquisition would see a jobs shrinkage from 5,500 to 1,500 as a result of unit sales.

Tan said his strategy was necessary for an industry where growth has slowed and winning market share has become difficult.

You would think you could manage your way out of a situation and come up with new products and an expanded business structure, right? Well, no.  Tan says that sort of thinking is living in the past and managers who thought they could engineer their way out of problems were fighting the battles of the past.

Patrick Moorhead of Moor Insights and Strategy says “Broadcom would slice, dice, destroy” Qualcomm and his colleague Anshel Sag added “Buy. Chop up. Sell off. Raise prices. Rinse. Repeat.” So no innovation or new chips. There will be a milking of existing technology.

While there are those who might be happy to see the end of Qualcomm, it does mean that there will be a sudden drop in innovation in the tech industry, particularly in mobile.