Activist investor pushes for EMC breakup
Investor wants storage giant to spin off VMware as independent entity
EMC's fifth-largest investor is reportedly pushing EMC to spin off VMware as an independent company, a move many solution providers would support as a way to help VMware become a premier provider of cloud technology independent of the influence of any legacy hardware vendors.
The Wall Street Journal reported on Sunday this week that New York-based activist investor Elliott Management has acquired a stake of over $1bn in EMC, making it EMC's fifth-largest investor and giving it the cloud needed to try to convince the storage giant to spin off VMware cloud and virtualisation developer.
Elliott Management, which the Journal said has about a 2-percent of the vendor's equity value of about $55 million, plans to argue that the "EMC Federation," which includes EMC, VMware, big data and business analytics software developer Pivotal, and security developer RSA hampers the performance of EMC's stock.
The EMC Information Infrastructure legacy storage solutions form the largest part of the company's business while VMware and Pivotal are growing much faster.
Investors seem to like the idea of an EMC breakup, the Wall Street Journal reported. EMC share prices were up nearly 5% at the midpoint of the trading day on Monday this week at over $28 per share. VMware shares, however, were down about 2% at just over $93 per share at the same point in the trading day.
VMware, which is a publicly-listed company despite being 80% owned by EMC, is expected to discuss its second fiscal quarter 2014 results this week. EMC will follow with its own second fiscal quarter 2014 results also this week.
VMware in early 2004 was acquired by EMC.