Shares of Broadcom Corp. slid 16% Thursday, a day after the Irvine-based semiconductor manufacturer ousted the head of its server chip business.
The dismissal of Raju Vesegna as head of Broadcom's ServerWorks unit came two months after the sudden resignation of the company's hard-driving former Chief Executive Henry Nicholas, who said he wanted to devote himself to his family.
The latest executive shake-up prompted some Wall Street analysts to downgrade Broadcom stock Thursday. Investors responded by sending its shares down $2.49 to $12.91 in Nasdaq trading.
"This is the company's second major and unexpected management change in 2003," Mark Edelstone, a semiconductor analyst with Morgan Stanley, wrote in a report to clients Thursday. He downgraded the stock to "equal weight" from "over-weight" because of "our concerns that the changes at ServerWorks could adversely affect Broadcom's competitive position."
Wedbush Morgan Securities analyst David Wu also downgraded Broadcom shares to "sell" from "hold."
Vesegna founded ServerWorks in 1994 and sold it to Broadcom in 2001 for $2.57 billion. Broadcom said Wednesday that Vesegna would be replaced by Duane Dickhut, who joined the company in January and had run its broadband processor business unit.
"Recently, there have been disagreements between the ServerWorks and Broadcom management teams over a number of operational issues and the strategic direction of ServerWorks and how the business fits into Broadcom's long-term plans," said interim Chief Executive Alan E. "Lanny" Ross.
Bloomberg News was used in compiling this report.