Broadcom shakes up ServerWorks leadership

Broadcom has replaced the head of its Serverworks subsidiary after disagreements over the company’s long-term strategy, Broadcom said Wednesday.

Duane Dickhut is now in charge of Serverworks, replacing company founder Raju Vegesna as president and chief executive officer of the Santa Clara, Calif., company. Vegesna was replaced due to both “operational issues” and strife over “the strategic direction of Serverworks and how the business fits into Broadcom’s long-term plans,” Broadcom said in a statement.

Rarely are press releases detailing executive changes so caustic, said Gordon Haff, an analyst with Illuminata Inc. in Nashua, N.H. “This is as close as you’ll ever get to a company admitting that an executive was butting heads and being really difficult, and we had to throw him out,” he said.

Broadcom vice president and chief financial officer Bill Ruehle cited “issues around product road maps” as a reason for Vegesna’s dismissal, in an interview Thursday. “There’s solid technology at Serverworks that was being applied in a very focused way to the server market. We think there are other possibilities out there,” he said.

The disagreements likely stemmed from the changes that have taken place in the market for server chipsets over the past few year, Haff said. Intel had a very poor track record in delivering reliable server chipset technology for a number of years, which allowed Serverworks to grow its business by delivering “good, solid, middle-of-the-road chipsets,” he said.

But Intel has done a much better job recently of delivering chipset technology and anticipating future technologies that will be rolled into servers, Haff said. Communications capabilities, new I/O technologies, and the rise of blade servers are changing the nature of the market, and faced with the prospect of competing directly with a rejuvenated Intel in a volume-driven market, Broadcom might have been pushing for Serverworks to pursue a different strategy that Vegesna simply didn’t agree with, Haff said.

Vegesna wanted to keep things the way they were, Ruehle confirmed. As for the time being, Dickhut will keep things that way, Ruehle said. “I don’t think we’ll see any dramatic changes. Serverworks remains committed to its core business,” he said.

Ruehle denied that two other members of the Serverworks management team, Kimball Brown, vice president of business development, and David Pulling, executive vice president of marketing and sales, had also left the company, saying “their status is still to be determined.” But the names of both executives had been removed from the Web page listing Serverworks’ management team as of Thursday.

Broadcom, based in Irvine, Calif., bought Serverworks in a stock deal worth $957 million in January of 2001. Even after the acquisition, Serverworks would appear by itself at trade shows and other industry gatherings, Haff said.

“Serverworks was essentially a small successful company that even after if was acquired, wanted to keep running itself as a small successful company,” he said.

Dickhut has headed up Broadcom’s business processor unit since January. He has managerial experience in both technology and sales and marketing divisions at former server vendors Digital and Compaq, and had the best background in server technology among eligible candidates, Ruehle said.