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Management Conflicts, Strategy May Be Behind Greene Exit

>Industry speculation reached fever pitch following EMC's precipitous announcement about the departure of Diane Greene from VMware as Wall Street hammered the stock, which closed down 25 percent the day after the announcement.

While theories abound, Greene's determination to maintain the autonomy of the company is well known. She has stated publicly her desire to disengage from EMC at some point in the future.

In addition, Greene reportedly differed with Joe Tucci, EMC's Chairman and CEO, over this issue as well as fundamental aspects of how the company should be run and how deals should be structured.

According to Rachel Chalmers, an analyst with the 451 Group "the tension has existed for a least a year, maybe more with EMC management." According to Chalmers, "EMC wasn't even allowed to sell VMware products tightly integrated with EMC storage."

The issues of both company financial results and the handling of strategy were also in the mix, according to analysts. At issue was whether the company has been properly positioned to meet the demands of the next phase of competition involving companies such as Microsoft and Citrix, as well as large systems vendors such as HP, IBM, Oracle and others.

Frank Gillette, a vice-president with Forrester Research, said the company was in good shape to stay on track until 2010 regardless of competitive activity, but noted that while "VMware executed very well on the paradigm it built," it may now be "lacking the marketing, strategy and leadership to jump up to the next level."

In terms of financial performance, investor concern was heightened last year when fourth quarter results failed to meet expectations. Although the numbers got back on track in the first quarter of this year, the company has lowered forecasts for the current quarter and said in a statement, "We expect revenues for the full year of 2008 will be modestly below the previous guidance of 50 percent growth over 2007."

Posted by Tom Valovic on 07/09/2008 at 12:49 PM


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