EMC, VMware swapping execs; offers preliminary Q2 results

VMware and EMC swap executives as Pat Gelsinger, currently president and chief operating officer at EMC, takes over as VMware's CEO.
Written by Rachel King, Contributor

VMware and EMC have swapped executives.

EMC, which owns VMware, has installed VMWare CEO Paul Maritz as chief strategist. Pat Gelsinger, currently president and chief operating officer at EMC, will take over as VMware CEO, effective September 1. He will also be named to VMware's board of directors. 

After news broke this morning that Maritz was departing, EMC and VMware had to calm investors down. VMware shares took a hit and bounced around amid the uncertainty.


Here's how the new executive roles shape up:

  • Gelsinger takes over at VMware.
  • Maritz fills a new technology strategist role at EMC. He will remain a board member at VMware.
  • EMC CFO Dave Goulden will become operating chief. 

Why now?

EMC chief Tucci said on a conference call:

You may be asking yourself why to make these changes now? Well, as I start with, we have a great strategy and opportunity and we are executing well. One of the things I've learned through my career is the time for to make these kind of changes is a position of strength when you are performing well and when you have customer permission to play in these new markets. We had a logical intersection as I said before VMWare moving to the next phase of the cloud computing with the software defined data center and solving the problems of the post- PC era. We are facing tremendous opportunities around the data and new product.

Tucci added that he will remain chairman of both EMC and VMware at least through the end of 2013.

Maritz said that the time was right to hand off to Gelsinger. Maritz, who approached the board with his succession thoughts, said:

This would be a right time to hand over the baton to Pat in many ways who is supremely qualified to take VMWare on the next leg of the journey and free myself up to think about some of these new more application oriented opportunities. There is an opportunity to basically make best use of the talent we have to address two of these very big opportunities in front of us, cloud infrastructure and all that implies and then what you can do on top of cloud infrastructure. 

Meanwhile, EMC and VMware moved to deliver preliminary results for the second quarter. 

For VMware, the virtual infrastructure giant is projecting a revenue of $1.12 billion (up 22 percent from Q2 2011) versus guidance of $1.1 billion to $1.12 billion. VMware also expects full-year 2012 revenues to fall between $4.54 billion and $4.63 billion.

For the second quarter, Wall Street is expecting VMware to report second quarter earnings of 66 cents a share on revenue of $1.11 billion.

News of the executive swap also falls on the heels of reports suggesting that VMware is spinning off its cloud portfolio into a new platform that could rival the likes of Amazon Web Services and Google Compute Cloud.

There isn't really any hint about this in the prepared statement -- except that VMware board of directors chairman Joe Tucci remarked that "the strong teams that we now have in place at VMware and EMC allow me to ask Pat and Paul to take on two of the defining challenges and opportunities of the new, unfolding IT era: Cloud Infrastructure and big data."

VMware will officially report second quarter earnings on Monday, July 23.

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