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Should EMC sell off 80% stake in VMware?

Brandon Butler | July 23, 2014
Breaking up is hard to do, but could a split be in store soon for EMC and VMware?

VMware is a substantial company though, and big enough that it could act independently; last year the company collected $5.3 billion in revenue.

Executive shake-ups at the three companies - EMC, VMware and RSA - show that these companies work together closely and they'd be expected to continue to do so in the future as well. Gelsinger, for example, is the former COO of EMC, while former VMware CEO Paul Maritz now heads up Pivotal. RSA's former President Tom Heiser is now at EMC, leading the company's cloud push there. 

Other pundits have weighed; SeekingAlpha commentator Dana Blankenhorn thinks it's a horrible idea for EMC and VMware to split:

"Everything EMC is doing with VMware, with Pivotal, and with its RSA Data Security unit, obtained in 2006 for $2.1 billion, is aimed at milking the EMC cash cow and creating new software businesses that can take on that load over time. The plan is working. But it's not going to keep working if vultures like Elliott are able to blackmail EMC into payouts aimed at their short-term gain at the expense of the long-term vision."  

He adds though that one way to potentially appease activist investors would be for EMC to reduce its share of ownership in VMware, but still keep a majority. Whatever happens, it should be watched by customers and competitors, but at the end of the day it likely will not have any immediate impact on the products or strategy of either company.


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