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Investors said to want EMC to spin off VMware

While other tech giants are buying startups by the handful, some enterprise titans could be splitting up into big chunks.
Written by Rachel King, Contributor

Earlier this year, business magnate Carl Icahn spearheaded a campaign to get eBay to spin off PayPal, and now it looks a similar movement might be underway at EMC.

Hedge fund Elliott Management Corp. has reportedly made a $1 billion investment in EMC, the equivalent of two percent in the IT services company, according to the Wall Street Journal on Monday.

But that's not all as the financial firm is also said to want to wield this investment as influence in getting EMC to siphon off its virtualization business.

Neither EMC nor VMware has commented publicly on the matter.

EMC acquired VMware in 2003 for $635 million in cash, gaining 80 percent control of the subsidiary. It has been rumored in the past about if and when EMC would make moves to purchase the remaining 20 percent.

There have been a few bumps and odd moments in the partnership.

Just over two years ago, VMware and EMC swapped executives, with VMware CEO Paul Maritz bumped up to EMC as chief strategist and then CEO of the enterprise big data joint venture Pivotal.

Pat Gelsinger stepped in as VMware CEO after serving as president and chief operating officer at EMC.

But in May 2013, EMC revealed plans to slash about 1,800 posts worldwide across both EMC and VMware, cutting positions within the Information Storage, RSA Information Security and Information Intelligence divisions. The move was said to be worth $80 million.

VMware will report second quarter earnings after the closing bell on Tuesday.

EMC is scheduled to follow with its own second quarter earnings report before the opening bell on Wednesday.

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