VMware CEO replaced and the stock market reacts negatively

If you thought the news about Microsoft's Hyper-V release lit up the virtualization news wire, who would have expected what happened next? VMware's board of directors decided to take action and announce that it made a change in the VMware leadership by replacing Diane Greene as President and CEO. With her removal, the board appointed Paul Maritz to replace her, and he was also added to the board. [ How will VMWa

If you thought the news about Microsoft's Hyper-V release lit up the virtualization news wire, who would have expected what happened next? VMware's board of directors decided to take action and announce that it made a change in the VMware leadership by replacing Diane Greene as President and CEO. With her removal, the board appointed Paul Maritz to replace her, and he was also added to the board.

[ How will VMWare change its virtualization strategy as a result of Microsoft's Hyper-V? And which company's solution is ultimately better? Read InfoWorld's recap of the situation. ]

Paul Maritz retired from Microsoft in 2000 after serving the company for 14 years. Maritz reportedly made it to the number three slot, behind Bill Gates and Steve Ballmer. Before being appointed to his new post at VMware, he was the President of the EMC Cloud Division, a post he earned after the EMC acquisition of his Cloud-based solution startup, Pi Corporation.

The removal of Diane Greene caused a stir and a flurry of news reports, as well it should have. But the story doesn't end with Greene's departure.

At the same time, the company also announced that it expected the company's revenue growth for 2008 to be "modestly below" its previous guidance of 50 percent. Financial numbers are due out in about two weeks.

So it sounds as if the board decided to unload as much negative news as possible at the same time, rather than roll it out in dribs and drabs. So with that, we watched throughout the day on Wall Street as VMware's stock price came tumbling down, until it finally closed at $40.19, down $13, or a drop of more than 24 percent in share price.

The deal is done, and everyone has now reported on the news. But questions remain unanswered. The obvious question: why? If you do more than read the occasional virtualization news clip, you know (or at least had a strong impression) that EMC's CEO Tucci and Diane Greene... well, didn't see eye to eye on things. Some have reported that Tucci said VMware needs someone at the helm with stronger operational experience to lead the company into its next growth stage. Others claimed that there was an argument over spinning off VMware from EMC. And still others claimed bad blood because Greene allowed other EMC competitor storage companies to become successful within VMware's partner ecosystem.

Perhaps the answer lies with each of these, one of these, some combination, or even something completely different. We may never really know the truth.

But now that the dust has settled, other questions beyond "why" remain. Dr. Mendel Rosenblum, VMware's co-founder and Chief Scientist is also Diane Greene's husband. What happens here? Will the VMware "idea guy" remain with the company after it executed the order to remove his wife and business partner? And what about the other executives who have served with Greene? What will they do next?

In what direction will Maritz take the company? With Microsoft's new play in this market, is this the right time for an executive and leadership change at VMware?

Already, the changing of the guard has taken place on VMware's Web site. Diane Greene is no longer listed as President and CEO, and oddly enough she is no longer listed as a co-founder of the company either.

And now, I suppose we wait and watch.

** UPDATE **

Thanks to Rupert for commenting and letting me know, Diane Greene has been added back to the list of Co-Founders under the Company Leadership page on VMware.com.

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