VMware replaces CEO with former Microsoft exec

Computerworld - VMware Inc. announced today that its co-founder and CEO, Diane Greene, is being replaced by former Microsoft Corp. executive Paul Maritz. Maritz was also immediately appointed to VMware's board of directors.

As news of Greene's departure spread, shares of VMware dropped sharply. The company's stock price closed just above $53 per share yesterday; at 1 p.m. Eastern time today it was about $38.50 per share.

VMware was purchased by EMC Corp. in 2004 for $635 million and saw triple-digit growth rates the following year -- dramatically adding to EMC's revenue. EMC sold off 10% of VMware in February 2007 in an IPO and used the money to fund a stock compensation plan for its employees and to help boost its stock price.

EMC did not immediately offer an explanation for Greene's abrupt departure.

In a statement, EMC CEO Joe Tucci said, "Diane guided the creation and development of a company that is changing the way that people think about computing. The board thanks her for her considerable contributions to VMware and wishes her every success in the future."

EMC spokesman Dave Farmer said no "single event or market dynamic" dictated the change in leadership at VMware.

"The VMware board just concluded this was the right time to implement these changes," he said. "The board thought it was appropriate to bring in new leadership with the experience and operational breadth to capitalize on the opportunities in front of VMware as it scales up from its current place to a billion-dollar software company."

Farmer said VMware's board of directors explored different options to allow Greene to continue to play "a significant role" at the company, but "unfortunately an agreement could not be reached," Farmer added.

Vmware was founded by Greene and four others in 1998. Greene had previously worked at Silicon Graphics, Sybase and Tandem and was CEO of VXtreme. She holds degrees in mechanical engineering, naval architecture and computer science from the University of Vermont, MIT and the University of California at Berkeley.

Maritz's experience and track record in the software industry would help "lead VMware to its next stage of growth and development," Tucci said. "He has decades of experience building one of the greatest franchises in software history -- Windows. Paul was instrumental as part of the core executive leadership team in building much of Microsoft's success."

Maritz retired from Microsoft in 2000. During his 14 years there, he managed the development and marketing of many of the company's major products, including Windows 95 and Windows NT.

In 2003, Maritz founded Pi Corp., a start-up software company focused on building cloud-based technology for new ways of doing personal information management. EMC acquired Pi in February 2008, and Maritz became president of EMC's cloud computing division.

In May, during its EMC World user conference, executives said the company plans to develop technology and services for the cloud computing market. Farmer reiterated that the company has yet to reveal details about that strategy, but he said they will be "forthcoming." He would said he couldn't say whether that was the reason Maritz was moved into Greene's position.

VMware expects to announce earnings for the quarter that ended June 30 on July 22. Maritz is expected to comment at that time about the company's plans for the second half of 2008, EMC said.

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