Update to Recent VMware CEO Change

Earlier in the month, I wrote about (view blog) the surprise CEO change at VMware VMW (NYSE) in which Paul Moritz, the former high-level Microsoft executive and at the time, head of Pi a subsidiary of EMC, was appointed to replace Diane Greene as VMware's CEO.  The change came after VMware's high flying stock which reached $130 shortly after its IPO back in August 2007 had dropped down into the $30 range.  To apparently appease VMware's troops and avoid a large brain drain, the company under Moritz has announced a new plan to assist VMware employees with the value of their stock options.  According to a story in InfoWorld,

The company disclosed in an SEC filing that it plans to offer its employees the opportunity to exchange their post-IPO ("underwater") stock options for an equal number of new options. The exercise price of the new options will be the stock price at the close of trading on the day immediately following the date that the exchange is completed. This option belongs to all U.S. based non-executive employees. Non-U.S. employees will be granted a to-be-determined proportionate number of restricted stock units after the exchange offer for U.S. employees has been completed.

Participation in the exchange is completely voluntary. Doing so may get the employee out from under water, but taking the company up on the deal will also restart the employee's option vesting schedule. Depending on the employees' goals, they may choose not to participate.

VMware is gearing up to compete with Microsoft who has produced its own product to compete directly with VMware's software.  At a minimum, Moritz recognizes the challenges he faces and is taking some concrete steps to address them.  Time will tell.  Stay tuned.  

VMware CEO Out, Former Microsoft Exec In

In a surprise announcement VMware VMW (NYSE), the company that creates and develops software designed to manage virtual machines, made public the immediate resignation of its co-founder and CEO, Diane Greene. The resignation comes in the wake of the company's latest announcement that its 2008 sales will be lower than earlier projections. In Greene's place, the company has selected Paul Moritz, a former Microsoft executive who retired from the firm in 2000 after fourteen high-profile years with the company. According to the Silicon Valley/San Jose Business Journal during his time with Microsoft,

Moritz managed the development and marketing of many of the company's major products, including Windows 95, Windows NT, Database, Tools and Applications.

In 2003 he founded Pi Corp., a startup software company focused on building Cloud-based solutions. Pi was acquired by EMC Corp. in February 2008.

In the company press release, VMware did not give a reason for the departure of Greene. VMware had been a high flying stock at the time of its initial IPO back in the summer of 2007. Even before the IPO, VMware was considered a star in the computer virtualization space. The company remains the leader in the field but has found itself lately in competition with a number of the biggest players including Microsoft, Oracle, Dell, Red Hat and many others. To make matters worse many companies have turned to open source software as a way to manage virtualization an approach that VWware has refused to take and has helped to place the firm at an even further potential disadvantage going forward.

Greene's departure may be due to lower sales, growing competition or the fact that the firm needs new executive blood for it to find a way to successfully compete and remain on top. VMware remains majority owned by EMC which very likely had a hand in today's management change.

This is definitely a company that should be watched closely as new management takes over.

For more:

ValleyWag (7/9)
Market Watch (later in day)

Giga Om

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Reuters
Market Watch
Barron's Blog
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