Breaking: Diane Greene Leaves VMware, Paul Maritz To Become CEO and President

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VMware co-founder Diane Greene (see BusinessWeek profile) has been ousted as president and chief executive of the company and will be replaced by former Microsoft executive Paul Maritz (we reported on him joining EMC’s cloud computing division earlier this year), effective immediately. The company also said that while it “is not updating guidance for the second quarter, we expect revenues for the full year of 2008 will be modestly below the previous guidance of 50% growth over 2007.” The mean estimate of analysts surveyed by Thomson Financial was for 51% growth to $2 billion.

Shares of the virtualization software maker went tumbling in recent trading. The stock was recently down 24.3% to $40.26 a share. Shares have fallen by two-thirds the past eight months. The stock went public at $29 and rocketed in its first two months of trading to as high as $125 a share.

On’s Go West blog, Adam Lashinsky writes that VMware “was so loved by investors that it singlehandedly drove the valuation of EMC, whose best move this decade may have been buying VMware before it had the opportunity to go public the first time.”

Things change. VMware stock is falling big time since the news got out.

It’s highly likely that EMC has replaced Diane Greene because of the poor revenue outlook. Also worth noting is that we reported a rumor earlier today about VMware possibly being fully spun out of EMC (which now becomes highly unlikely, considering Paul Maritz’ track record).

We’ll post more details as soon as they’re available. We’re wondering how the VMware troops will react on the news, and what will happen with Mendel Rosenblum, Chief Scientist at VMware and Greene’s husband.

This is the official take from the company’s chairman, Joe Tucci:

Reuters has a comment from Jefferies and Co analyst Katherine Egbert, who was disappointed the company did not hold a conference call to explain why it was cutting its revenue forecast.

“She said she suspects VMware is concerned that sales of its server virtualization software will get squeezed by new competition from Microsoft, which late last month started selling a rival product. Microsoft introduced that product, which costs far less than VMware’s offering, six weeks ahead of its previously announced launch date.”

Update: VMwareVideos reminded us of this video of Diane Greene talking about VMworld.

They also found this one featuring the new CEO and President, Paul Maritz, an ex-Microsoft Corp executive, reflecting on what it’s like to have Bill Gates review your stuff.

[Source: MarketWatch]

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  1. Zetto F. says:

    > We’re wondering how the VMware troops will react on the news

    Well, let’s see. Our already anemic stock option values were cut in half today due to the seemingly amateurish way in which Greene was replaced,. And then without so much as a nod to that loss, Paul Marits adds insult to injury by suggesting all VMwareans have rushed out to “Google” him rather than lick their corporate-inflicted financial wounds. Obviously executive narcissism knows no bounds.

    It may very well be the case that new leadership was needed, but Joe Tucci just gave Microsoft an early Christmas present in the manner in which he did it. And compounding the debacle by adding that VMware expects to miss 2008 earnings suggests that, even if new leadership was required, Dianne Greene isn’t the only executive who needs to be handed their walking papers.

    Of course, that assumes narcissism and ineptitude are to blame for the pummeling of VMware’s stock price. There’s also the possibility that EMC intentionally deflated the value because they couldn’t find a buyer at the stock’s previous price point. It would hardly be the first time “the troops” were sacrificed at the corporate alter to profits.


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