Is an Activist Investor Pushing EMC to Spin Out VMware?

An activist investor is looking to strong-arm EMC into spinning off VMware, reports have claimed.

A Wall Street Journal article, citing “people familiar with the matter”, claims that Elliott Management Corporation has recently taken a $1bn-plus stake in the storage giant. This would reportedly make the hedge fund firm EMC’s fifth-largest stakeholder, accounting for about two per cent of the vendor’s equity.

According to the WSJ sources, Elliott is keen to convince EMC’s leadership that the company’s flagging stock price would get a shot in the arm were it to spin off virtualization titan VMware, in which it has an 80 per cent stake. A meeting with chief executive Joe Tucci is imminent, according to the article.

“We’re always happy to meet with our shareholders,” was the only comment made by EMC.

In the first quarter of this year EMC saw its net profit fall by a third year on year to $392m, despite the fact that revenue rose two per cent to $5.5bn.

The storage heavyweight has owned VMware for more than a decade, having closed a $625m cash deal for its majority shareholding in January 2004.

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