Speculation around the fate of EMC and its satellite companies escalates as the clock runs out on a stand-still agreement it inked with activist investor Elliott Management.
The fate of EMC, and the federation of companies it leads, seems very much up in the air as the clock winds down on a standstill agreement between it and Elliott Management, an activist investor that has pushed hard for changes at the company.
EMC EMC 2.77% , which owns an estimated 80% of VMware, may end up getting bought by VMware according to the latest report in Re/Code, which first posited this scenario a few weeks ago.
The latest report holds that EMC’s board of directors is taking a serious look at a potential buyout by VMware and also want 68-year-old Joe Tucci, CEO and chairman of EMC, to retire by year’s end. Tucci, proclaimed by some to be “CEO for Life” has put off retirement several times, no doubt to the exasperation of lieutenants like Pat Gelsinger, CEO of VMware, who at one point was Tucci’s successor at EMC.
All of this uncertainty comes at a time when EMC is trying to sort out its cloud strategy, paving the way for Virtustream, the enterprise cloud company it bought in March for $1.2 billion, to become yet another member of the EMC Federation of companies owned or partly owned by the storage giant. Federation members now are VMware, RSA, VCE, and Pivotal, which just had some pretty major management shuffles of its own last week, with Paul Maritz ceding his CEO job to Rob Mee.
Former Virtustream CEO Rodney Rogers will head up the new cloud entity.
EMC and its federation members field an array of diverse (or complicated) cloud options, depending on your point of view.
Tucci has positioned the alliance as a good way for the individual companies to cooperate with each other but also sell their own products independently. Elliott Management’s position has been that VMware VMW 1.55% , in particular, is far more valuable as an independent publicly traded company than it is as part of this confederation.
There has even been speculation that the new cloud entity based on Virtustream might incorporate cloud assets from other federation members, most notably VMware’s vCloud Air.
To date, EMC’s cloud strategy has been a bit of a mystery. Because of its stake in VMware, EMC would love to see customers go to vCloud Air, but it never named that as its go-to cloud. In the meantime, public cloud players Amazon AMZN 3.29% Web Services, Microsoft MSFT 2.27% and Google GOOG 0.90% Compute Cloud have dominated that market.
Spokespeople from VMware and EMC declined to comment, but things are clearly percolating. VMware’s annual VMworld conference kicking off in San Francisco next week could end up being very interesting.