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Broadcom powerhouse Krause sets his exit

One of the primary Broadcom executives responsible for leading talks about the $61 billion acquisition of VMware has resigned, according to Bloomberg News.

Broadcom President Thomas Krause's resignation will be effective on July 15. He leaves for a new position with an unnamed privately held enterprise software company, said Bloomberg.

Krause's position will be eliminated and CEO Hock Tan will absorb his job responsibilities, reported The Wall Street Journal (WSJ).

Krause's departure comes at an inopportune time for Broadcom as the semiconductor company "attempts to close one of the biggest technology deals in history," said Bloomberg. However, his resignation isn't a result of a disagreement with Broadcom or management, or related to company performance, according to Bloomberg and WSJ.

In coordination with CEO Tan, Krause was "one of the chief negotiators" in discussions to acquire VMware for $61 billion, said Bloomberg. Krause became CFO of Broadcom in 2016 and has headed the chipmaker's six software divisions since 2020.

Investors and customers are among those starting to gnaw their fingernails over the possible deal, expressing concern about Broadcom's history of absorbing other software companies.

"As regulators mull the implications, VMware investors, employees and customers fear Broadcom will mess up the formula," reported Light Reading's Iain Morris earlier this month. "Its track record on takeovers of software companies is marked by layoffs and R&D cutbacks, say critics. Speculation alone could prompt customers to look elsewhere."

Customers of both companies are concerned about the potential deal, according to a recent S&P Global Market Intelligence survey. About 56% of Broadcom and/or VMware customers said they felt negatively about the deal. Customers' primary concern is that "innovation would suffer, synergies would be elusive and software licensing terms might become less favorable," wrote Morris.

Since the deal was announced in May, VMware's share price is down 14%, and since its high point in April 2019, the stock has dropped 44%, added Morris.

The VMware deal is one of the largest in recent history for the technology space. It ranks among Dell's purchase of EMC (VMware's former owner) for $67 billion in 2015, and Microsoft's $68.7 billion bid for video game company Activision Blizzard, reported Light Reading's Mike Dano. He notes that Dell completed a VMware spinoff last November.

— Kelsey Kusterer Ziser, Senior Editor, Light Reading

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