EMC shrugs off VMware spin-off rumours

CEO Tucci insists he has never even met with activist investor keen to drive an EMC-VMware divorce

EMC's chief executive Joe Tucci has insisted he has never met with an activist investor who is pushing for a VMware spin-off as he talked up the value of the firm's federation model.

On Monday, the Wall Street Journal claimed investor Elliot Management took a $1bn (£590m) slice of the storage giant as it looked to strong-arm it into selling off VMware.

But on a call discussing its second-quarter earnings last night, EMC's chief executive Joe Tucci (pictured) said he has never met with the new investor and advised against its alleged plans.

"I have not met with anybody from Elliott, as a matter of fact, in my whole life," he said on the call which was transcribed by Seeking Alpha. "So I really do want to hear what their proposals are and I'm sure they would like to hear some of our plans as we presented to our other shareholders."

EMC is made up of its core storage business EMC Information Infrastructure (EMC II), VMware and Pivotal. The so-called federation scheme has been in place for a while now but at its partner and customer event EMC World in May, the firm was keen to ramp up awareness of the model.

"We have a great collective set [of companies]," Tucci added. "To me, splitting them up [and] spinning out one of your most strategic assets, I don't know another tech company that's done that and been successful. So again, I am interested to hear ideas."

For its second quarter, which ended 30 June, EMC's net income plummeted 17 per cent annually to $622m on revenue which rose 4.7 per cent to $5.88bn over the same period.

Its big data startup Pivotal grew 29 per cent year on year, while VMware – whose Q2 financials were published earlier this week – grew 17 per cent over the same period. EMC II weighed down the overall firm's growth after managing to post only a one per cent annual sales spike.

Tucci said the combination of the businesses made EMC's offering unique.

"Our businesses are strategically aligned but laser focused on their individual missions," he said. "We selectively align around key partnerships and go-to-market opportunities to realise the benefits of scale.

"We are better able to recruit and retain the best and the brightest people and focus them on the most important opportunities."