Questions About VMware’s Stability Arise as Top Execs Leave Pre-Broadcom Acquisition

Three top VMware executives reportedly will leave the company, possibly signaling other high-level resignations at the firm.

In a memo to staff Monday, VMware CEO Raghu Raghuram announced the departures of the organization’s VP of cloud infrastructure Mark Lohmeyer, VP of applications and management Ajay Patel, and VP of networking and advanced security Tom Gillis.

“I think [this departure] is about timing,” Omdia analysts Roy Illsley and Dominika Koncewicz said to Data Center Knowledge, which shares parent company Informa with Channel Futures. “These VPs know that some changes are coming in 2023 and they have reached a point where they could take any bonus or stock and leave without losing money.”

Omdia’s Roy Illsley

They project the next 12 months will be critical in VMware’s quest for stability amid the uncertainty of the regulatory approval process that comes with any acquisition deal.

“I think when the deal does close, you’ll see a big reorganization,” the analysts said.

EU Regulators

Omdia’s Dominika Koncewicz

The departures come on the heels of the soon-to-close $61 billion acquisition of the firm by Broadcom. Also, European Union regulators announced this week unsettling news for the company. The EU will be taking a closer look at the terms of the acquisition transaction before signing off on it.

This could further push back the closing date well into late 2023. It leaves room for speculation about Broadcom’s prospects, reported Data Center Knowledge.

As far as earnings, Broadcom shows no signs of struggle. The chipmaker reported its sales forecast last week and Bloomberg reports an uptick in corporate spending. While all chipmakers’ share prices are down this year, Broadcom’s is only down 20%. This gives the firm an advantage over its chipmaking peers.

In addition, Broadcom’s CEO has denied any plans to raise VMware prices post acquisition, as Channel Futures reported.

“The answer is simple: No,” Tan wrote in a blog.

Broadcom’s methodology “was not based on taking existing products and raising their prices,” he said.

“Following the close of the transaction, we will invest in and innovate VMware’s products so we can sell even more of them and grow the VMware business within enterprises, deepening and expanding the footprint instead of potentially raising prices,” Tan said.

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