July 18, 2012
EMC, VMware Announce Executive Shakeup
redOrbit Staff & Wire Reports - Your Universe Online
Data storage firm EMC Corp. on Tuesday named chief operating officer Pat Gelsinger as the new chief executive of virtualization software company VMware Inc., a company in which EMC holds a majority stake.Gelsinger, president and chief operating officer of EMC´s Information Infrastructure Products, will replace outgoing VMware CEO Paul Maritz, who will assume the role of EMC´s chief strategist, the company said.
Gelsinger´s and Maritz´s new positions will take effect September 1.
Maritz, 57, had doubled VMware´s revenue from $1.88 billion in 2008, when he became CEO, to $3.77 billion last year. He will remain on the company´s board of directors.
In his new role as chief strategist, Maritz will focus on defining EMC´s strategy for cloud computing and data storage.
Meanwhile, EMC chief financial officer David Goulden will move into a new role as president and chief operating officer, the company said.
The company also said it would spin-off its Cloud Foundry open-source platform as a service (PaaS), making it a subsidiary of EMC.
The executive shuffling came about, in part, as a result of talks several months ago among EMC´s board of directors about how to best leverage VMware´s leading market position in virtualization software into areas like cloud and data storage. Maritz said it was during those meetings that he decided it was time to turn the position over to a new CEO.
Maritz first met Gelsinger, 51, when both men worked at Intel in the 1980s.
The executive shake up gives greater authority to the two leading contenders to succeed EMC´s longtime CEO Joe Tucci when he decides to retire, although Tucci postponed his retirement for a second time on Tuesday, saying he would remain in his current position through at least the end of 2013.
“I´m will not overextend my welcome by any means, but as long as I´m enjoying it, providing value, they want me, the board wants me -- I´m very energized so I´m not putting any firm end date in the sand,” Mr. Tucci said during a conference call according to Bloomberg's Dina Bass.
However, the chief executive, who assumed his post in 2001, acknowledged that he would ultimately retire at some point.
"Obviously, there is an inevitability to this,” he said.
Gelsinger, 51, and Goulden, 53, embraced their new roles during the call.
Mr. Tucci said it was Maritz who recommended Gelsinger for chief executive.
EMC also on Tuesday pre-announced revenue of $5.31 billion for the second quarter, and reiterated that it expects to meet its full-year revenue target of $22 billion, with earnings-per-share of $1.70 on an adjusted basis.
Meanwhile, VMware announced that its revenue grew 22 percent to $1.1 billion during the second quarter, exceeding analysts´ estimates. The company also raised its sales projections for the year.
Shares of EMC´s stock fell 28 cents to $23.01 during afternoon trading amid uncertainty about the upcoming executive changes, but rose more than 5% in after-hours trading following the pre-announcement of financial results.
VMware shares fell sharply during the trading day, falling 4.9 percent to close at $80.29, although the stock rose as high as $86.28 per share during afterhours trading on news of the company´s second quarter results.