VMWare Takes Another Blow!

Real Issues Facing the Virtual Giant

Virtual Server Diagram

Hot shot tech startup VMWare, who specializes in Virtual Servers (maximizes efficiency and cost by using more resources of one server to reduce the need for many servers), announced that it’s replacing CEO Diane Greene with former 14 Year Microsoft vet Paul Martiz (Businessweek.com). Keep in mind this was a company who’s IPO (Stock Debut) was in August 2007, and hit a high of $125 (Nov. 2007), and who’s Revenues rose a faster-than-expected 69% for the 1st Quarter in 2008.

The price today? Around $37 (near the 52-Week low), including a nearly $15 decline over the past two days. For their near-term future, VMWare is warning its investors of a possible decline in 2008 Revenues citing the stagnating U.S. and Global Economy may present. Compounding that will be the costs of their most recent acquisition B-Hive Networks as they try to integrate them into their technology portfolio.

Greene co-founded VMWare in 1998 with husband Mendel Rosenblum, and sold it in 2004 to EMC for $635 Million. From digesting all the coverage so far, it appears that the main cause of this “divorce” from VMWare stems from disagreements with EMC. Specifically over EMC’s handling of VMWare’s operations and some investors questioning whether or not she can really take VMWare to the next step, or even through these stagnant times.

Me thinks that Microsoft must be eating this up. They decided to let the specialization companies like VMWare focus a lot on Virtual Servers, while Microsoft would take things slowly with Virtual Server software. I wouldn’t be surprised if Microsoft (after they finish with Yahoo), turn their attention towards possibly acquiring VMWare from EMC (or maybe go one step bigger and acquire EMC)…but the boys at Anti-Trust HQ would probably be salivating to get them back into court. Whether that thought ever crosses Microsoft’s mind or not, who knows, but it would be nice I bet to have VMWare technology integrated directly into Windows Server Technology.

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~ by drcorner on July 9, 2008.

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