Should EMC and VMware separate?

Posted by virtualization.info Staff   |   Wednesday, January 10th, 2007   |  

J.P.Morgan doubts about real benefits of current relationship between EMC and its subsidiary VMware, as ZDNet reports:

EMC’s acquisition of virtualization software maker VMware completed in January 2004 may have been one of the better deals in the technology sector in the last three years. But perhaps it’s time for EMC to bid adieu.

VMware could eventually become a substantial component of EMC’s overall market capitalization. While this suggests that VMware should generate incremental value for EMC’s shareholders, EMC’s stock has not seemed to benefit from this at all.

Indeed, looking at EMC’s market capitalization from 2004 to the third quarter of 2006, we can see that our estimated value for VMware has increased from 2% of the total to 13% in 2006, yet EMC’s stock price fell 10% over the same time period…

Read the whole article at source.

Just few days ago EMC Vice President of Technology Alliances, Chuck Hollis, tried to clarify from his corporate blog why EMC and VMware relationship is so evanescent.



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