New CEO Paul Maritz, formerly of Microsoft, may have just taken the helm of a sinking ship in VMware. CEO Diane Greene was unceremoniously ousted by chairman and CEO of corporate parent EMC Joe Tucci last month, leaving no women navigating any top Valley companies. Her husband, cofounder and fellow sailor Mendel Rosenblum to whom Tucci offered the CEO job and a board seat, has now officially resigned; product development VP Paul Chan soft-quit and will be gone by October; and VP of R&D Richard Sarwal moved to competitor Oracle last week (where, thanks to a recent California court decision, he does not have to honor any non-compete agreements).Rosenblum has been on vacation for a month after Greene's firing, possibly to lessen the bad publicity ahead of VMworld 2008 in Las Vegas which starts next Monday — while Microsoft has been busy introducing its own virtualization technologies in a barnstorming campaign this week. My advice to Greene and Rosenblum? Sell those pre-IPO options as soon as you can, because the stock is bound to dip below the initial price sooner rather than later.
Despite a fiery temper and fearsome presence in meetings, departed VMware cofounder Diane Greene isn't leaving the company with very many enemies. On workplace review site Glassdoor.com, employees gave Greene an 84 percent rating — better than the 72 percent VMware parent company EMC's worker bees gave their CEO Joe Tucci. In the section labeled, " Advice to Senior Management," one current employee, a senior systems engineer, wrote: “Listen to Diane.” Another lists VMware's "pros":
Why would VMware push out cofounder Diane Greene — heretofore remarkably successful — at the software company's very first sign of trouble? It's not like Microsoft's entry into VMware's market, which helped knock down VMware's high-flying stock, was unexpected. One theory: Joe Tucci, the CEO of EMC, which owns 86 percent of VMware, holds a personal grudge against Greene and took the opportunity push his rival out.
Why so gloomy, VMware investors? The company's stock drop, while likely driven more by the virtualization software maker's newly slenderized forecasts and the resignation of its founder, seems like a slap in the face to incoming CEO Paul Maritz. And that would be a shame, since VMware is now getting one of the princes of the software world as its boss — and just in time, as it's facing tough competition from Microsoft, where Maritz used to work.
Click to viewBenchmark-backed Glassdoor.com popped out of stealth mode as a site that lets users find out what employees think of their employers. As a part of the ratings, company CEO's get a grade. Some, such as Cisco's John T. Chambers and Apple's Steve Jobs fared very well — coming away with 93 percent and 95 percent approval ratings. Others, including Microsoft's Steve Ballmer and Yahoo CEO Jerry Yang, did not. The ten worst-rated CEO's and what employees told Glassdoor they think about them, below.
Storage is a predictable need; have you ever heard anyone say they need less of it? That has long been EMC's pitch to Wall Street — that demand for its storage hardware and software is ever reliable. The earnings news from the company is mixed: Customers are still buying, with revenues up 17 percent to $3.5 billion, but buyers in the U.S. are taking longer to make up their minds and sign purchase orders. Rational caution, or a sign of trouble ahead? EMC CEO Joe Tucci, in a conference call, acknowledged that the environment was "tough," but stood by his earlier forecasts. If EMC's customers continue their delaying tactics, they may prove Tucci overconfident. At some point, his salespeople will bow on price to seal deals and make their quotas. Storage may be a necessity, but EMC's profit margins, which rose to 15.8 percent in the quarter, are not.
Microsoft is releasing an early version of Hyper-V, its virtualization software, ahead of schedule. Microsoft is competing head-on with high-flyer VMware, which went public in a much-hyped IPO earlier this year. The company, which is majority owned by EMC, is off 20 percent from its all-time high last month. For the 99 percent of you whose business card doesn't say "IT Peon," here's what this means.
The problem with selling your wares to Fortune 500 companies? There are only 500 of them. And the high-priced, hard-charging sales force required to woo them is prone to scandal, as a recent sex-bias lawsuit against EMC alleges. That, I believes, explains why the storage-hardware maker is getting into the consumer business with its $76 million purchase of Mozy, an online data-backup service. With only 180,000 customers, the purchase price seems high, as GigaOm and others have noted. But small businesses are often better courted with consumer-friendly offerings than with hard-sell pitchmen.
VMware, that boring little virtualization-software company, has gotten a lot more interesting since its moonshot IPO. The partial spinoff from corporate parent EMC was the flashiest debut since Google, and the comparisons to the search behemoth keep coming. Bloomberg is reporting that VMware is now competing with Google for the very lifeblood of Silicon Valley — developers. And it's willing to use its newfound IPO wealth to steal programmers from the rest of the Valley. Of the 1,168 jobs — 1,168! — listed on VMware's career webpage, 596 are listed under IT or R&D. With a rumored starting salary of $130K-$160K, and stock options with a current strike price around $66, look for frustrated Googlers to start trickling towards Palo Alto.
Just like the Perseids that streaked across the sky this weekend, VMware, a boring little software company, is leaving a meteoric trail, up and away, on the stock ticker. Bought by EMC, the storage-hardware maker, in 2003 for a mere $635 million, VMware's backers had hoped to spin it off at a value of $10 billion. A staggering amount — but staggeringly low, it turns out. After the stock started trading today, it jumped from its $29 offering price to $55, almost doubling the company's value before the stock fell back a bit. At its peak earlier in the day, VMware was worth nearly $20 billion. Ashlee Vance of The Register has been tracking the stock live all day, as have others, but lost amidst the tick-tock of the stock price is the answer to this question: What does this mean for the Valley?