CORRECT: Management Change and Pre-Announcement Jolt VMware Shares

Date : 04/12/2012 @ 4:09PM
Source : Dow Jones News
Stock : Emc Corp. (EMC)
Quote : 29.05  0.0 (0.00%) @ 2:05AM

CORRECT: Management Change and Pre-Announcement Jolt VMware Shares

Vmware Common Stock, Class A (NYSE:VMW)
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("UPDATE: Management Change and Pre-announcement Jolt VMware Shares" at 9:17 p.m. EDT on April 11 misstated that Proofpoint as a product, when it is only a feature of BOSH. The correct version follows:)

-- Events overshadow VMware product announcement

-- Cloud foundry adds features

-- Includes multi-cloud development, management

 
 

By Steven D. Jones

Call it VMware Wednesday.

On Wednesday, the Palo Alto, Calif.-based computer virtualization giant pre-announced first-quarter performance, shook up its management team and introduced a suite of new products.

VMware Inc. (VMW) said its first-quarter results, due to be released on April 18, would "broadly meet or slightly exceed" the company's original guidance of between $1.015 billion and $1.04 billion. Revenue was seen coming in at $1.028 billion, according to a consensus of analysts polled by Thomson Reuters.

The announcement came the same day VMware said Chief Financial Officer Mark Peek is stepping down and Carl Eschenbach is becoming chief operating officer.

Shares of VMware closed down 2.5% to $107.61 Wednesday after dipping as low as $103 a share earlier in the day. The stock price continued falling 0.2% to $107.44 in after-hours trading.

VMware dominates the market for virtualization software, which allows computer networks to run multiple virtual computers on a single server. The product has become popular with corporate customers, who use it to reduce their information technology costs.

Peek will serve until June 1, then take the post of CFO at Workday Inc., a privately held software company. Peek sits on Workday's board. VMware is launching a search for a new CFO.

Nielsen will remain at the company as a co-president in charge of the application platform. Carl Eschenbach, who had been head of customer operations, will become a co-president and chief operating officer.

Brian Freed, an analyst at Wunderlich Securities, called the executive changes "immaterial" because VMware is a subsidiary of EMC Corp. (EMC), which owns 80% of the company. The ownership stake gives the parent company strong financial oversight and reduces the role of the VMware CFO, he said.

The company didn't respond to a request for comment about the CFO's role.

Also on Wednesday, VMware introduced new products for its Cloud Foundry platform. Cloud Foundry is used to run and manage cloud systems that allow data and applications to be accessed from Internet-connected computers.

Among the new products is Cloud Foundry BOSH, which lets users operate multiple clouds in a large cluster. The new features, which VMware will give away, also allow developers to create and launch micro-clouds from devices as small as a laptop computer.

In the year since the introduction of Cloud Foundry, the platform has attracted thousands of developers because it offers an affordable avenue into cloud application development, a growing market for software developers. The tools added Wednesday widen that path.

More clouds increases demand for VMware's core virtualization software, so VMware benefits from Cloud Foundry even though it doesn't charge for it.

"VMware is being a disrupter," said Al Hilwa, an analyst at IDC.

By Steven D. Jones, Dow Jones Newswires; 360-834-1865; steve-d.jones@dowjones.com

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