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 Fortune.com’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:
“As one of the founders and the leader of VMware, Diane guided the creation and development of a company that is changing the way that people think about computing,” Tucci said in the statement. “The Board thanks her for her considerable contributions to VMware and wishes her every success in the future.”
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.”
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.