Shares of VMware (VMW) and its parent company, EMC Corporation (EMC), are rising after the companies clarified their plans for a new company, Pivotal, and confirmed the intention to eventually take it public. The companies previously announced last December that they were committing existing technology, people and programs under one virtual organization—the Pivotal Initiative—led by Paul Maritz, EMC's Chief Strategy Officer. EMC said it would contribute "most employees and resources" from its Greenplum and Pivotal Labs organizations, while VMware would give most of its vFabric, Cloud Foundry and Cetas organizations to Pivotal. Earlier this morning at a joint presentation for investment professionals, EMC Chairman and CEO Joseph Tucci confirmed a plan for Pivotal to create its own equity so that it can potentially attract strategic investors, with an eye on "eventually" taking Pivotal public. Tucci suggested that the company would follow a roadmap similar to the one used for VMware, a spin-off that is publicly traded but still majority-owned by EMC. The companies said VMware will have an ownership stake of about 31% in Pivotal, while EMC will hold the remaining 69% of the new company. Additionally, VMware lowered its revenue guidance for the full-year to account for the assets it plans to concede to Pivotal, but raised its prior view of its operating margin for the year. VMware also said it expects its revenue growth rates to accelerate after this year, guiding for revenue growth of 15%-20% in 2014 through 2016. Shares of VMware gained nearly 7% to $80.39 in mid-morning trading, while EMC rose about 2% to $24.94.
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