McData lays off 128, more to lose jobs after Brocade buy

BROOMFIELD – One business day prior to its acquisition by Brocade, McData laid off 128 workers. It also plans to let 142 more go by July 26.

San Jose, Calif.-based Brocade Communications Systems Inc.’s (Nasdaq: BRCD) purchase of McData Corp. (Nasdaq: MCDTA/MCDT) had been pending for months, and closed Monday, Jan. 29.

On Jan. 24, McData notified the Colorado Department of Labor and Employment that it intended to layoff 150 people Friday, Jan. 26, said Bill Thoennes, a spokesman for the department.

But only 128 actually lost their jobs, a number that was verified by Brocade spokeswoman Michelle Leach.

Prior to the layoff, McData employed 570 in Colorado, Thoennes said.

According to Leach, when the acquisition was announced last August, each company had 1,400 employees worldwide. When the deal closed, the entire workforce was 2,400. The 400 jobs were lost to “attrition,” she said.

The day of the layoff, which was limited to the Broomfield office, Thoennes said McData filed a Worker Adjustment and Retraining Notification notice with the labor department, stating further layoffs were planned.

According to the WARN notice, 73 will be let go from the Westminster location on April 26, followed by 69 in Louisville July 26.

Leach verified these numbers, but not the dates or locations. In an e-mail she wrote, “In the U.S., Brocade has offered both ongoing and transitional employment opportunities to a number of McData employees. We are still in the midst of our integration planning throughout the international regions.”

Leach could not say what the future of the three now-Brocade offices in Colorado would be, although she stated, “We will continue to have a presence in Colorado … from an engineering and IT perspective … .”

Employers are required by federal law to file WARN notices under certain circumstances: when they have 100 employees or more and are terminating least one-third of them. So the initial 128-person layoff did not require one, Thoennes said, but the total of 270 over the next seven months – nearly half of the Colorado workforce – triggered the filing.

When the labor department receives a WARN notice it provides layoff transition workshops for the displaced employees including job search skills, resume writing and how to apply for unemployment insurance.

Although McData wasn’t required to file a WARN statement for the initial layoff, it did notify the labor department, and department staff conducted a workshop Jan. 25, Thoennes said.

Contact Caron Schwartz Ellis at 303-440-4950 or [email protected].