Executive Departure Adds More Uncertainty to Broadcom’s VMware Acquisition

S. Schuchart

Summary Bullets:

  • Tom Krause is leaving Broadcom to become CEO of Citrix-Tibco, increasing tensions around the planned acquisition of VMware.
  • Broadcom CEO Hock Tan is taking over the Broadcom Software division, but there may be a chance that VMware’s leadership team could run the division if the acquisition closes.

The latest chapter in the saga of Broadcom’s quest to buy VMware sees the architect and face of the deal, Broadcom Software President Tom Krause, leaving Broadcom to become CEO of Citrix-Tibco. For fans following along at home, Citrix was purchased by private equity firms Vista Equity Partners and Elliott Investment Management that plan to merge Citrix with Tibco. The merger of those two is much like the purchase of VMware by Broadcom – a move with very few synergies that leaves everyone scratching their heads and wondering why. It seems as if the thought process is that any software company can be merged with any other… because they are all software, right?

Krause adds more fear, uncertainty, and doubt regarding the success of the planned acquisition by leaving before the purchase of VMware is finalized. To make it worse, Citrix competes with VMware in a number of markets, including desktop and server virtualization. Broadcom’s CEO, Hock Tan, will be adding Krause’s responsibilities for Broadcom and the planned acquisition to his duties. Tan has appointed Charlie Kawwas, Broadcom’s current chief operating officer, to the position of President of the newly formed Semiconductor Solutions Group. This will no doubt remove some duties from Tan’s plate, but the responsibility of being CEO and running Broadcom Software on the eve of its largest acquisition ever will be difficult.

Right now, the departure of Krause increases the anxiety that VMware employees and channel partners are feeling as the deal proceeds. However, there may be some cause for hope. It was Krause’s unpopular and rough handling of the Symantec and CA acquisitions that cast so many doubts on the acquisition of VMware. Symantec and CA were brutalized in their acquisitions by Broadcom with steep staff cuts, focus only on the most profitable customers, isolation of channel partners, and cuts to research and development. If VMware is treated the way Symantec and CA were treated, it would be hugely damaging to employee morale and the businesses of its channel partners. With Krause off to supervise another merger, this leaves room for not only changes that may have not been possible under Krause, but for the possibility the VMware’s senior management or even its CEO could become the president of Broadcom Software. VMware leadership running Broadcom Software would do a lot to assuage employee, customer, and channel partner fears over the planned acquisition.

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