EMC executive shuffle puts CFO Goulden in spotlight

BOSTON Tue Jul 17, 2012 7:01pm EDT

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BOSTON (Reuters) - Data storage equipment maker EMC Corp (EMC.N) has replaced the popular head of its VMware Inc (VMW.N) software unit and promoted Chief Financial Officer David Goulden to president and COO in a move that suggests he could become the next CEO.

EMC and VMware also released preliminary quarterly results late on Tuesday that were generally in line with Wall Street estimates. That was good news compared with a report from Intel Corp (INTC.O) that also came out on Tuesday. The chipmaker issued a weak revenue forecast that reinforced fears about the outlook for the PC industry.

EMC and VMware shares rose in extended trading, more than erasing declines in the regular session after news reports that VMware CEO Paul Maritz was leaving.

EMC said that Goulden, 53, will immediately assume responsibility for all business units, sales and customer operations, services, marketing and overhead. He will also remain CFO.

The promotion sets up Goulden as the likely candidate for chief executive when long-running CEO Joe Tucci retires in the next year or two.

"This signals that the board is now leaning towards Goulden, which would probably the best outcome," said Kaushik Roy, a long-time EMC watcher who is a principal with Hercules Technology Growth Capital.

Goulden has served as CFO since 2006 and has also run global sales, marketing, alliances and business development.

One other frequently named candidate for the top job at EMC has been Maritz, 57. On Tuesday, he was named EMC's Chief Strategist, effective September 1.

Roy said that appeared to be a demotion ordered by the board of directors.

Maritz was replaced by Pat Gelsinger, president and chief operating officer of EMC's information infrastructure products division. He had long been floated as a top contender for CEO at EMC.

Tucci said in a Tuesday afternoon conference call that he plans to remain with the company through at least the end of next year. He did not identify his successor, except to say that he would choose the candidate from EMC's current executive pool.

Nomura analyst Rick Sherlund said Maritz's departure from VMware was a loss for the company's shareholders.

"There's a sense of relief that the quarter is okay, but I don't think investors are happy to see EMC slopping out Paul Maritz," Sherlund said. "I mean he was running one of the biggest software companies and now he's doing this strategy thing at EMC."

JMP Securities analyst Pat Walravens said Maritz would be missed.

"His ability to lay out a technology vision is unparalleled," he added.

Maritz worked at Microsoft for 14 years through 2000, managing the development and marketing of products, including Windows 95.

He joined EMC after the storage company acquired a cloud-computing firm he founded, Pi Corp. He ran EMC's cloud computing division before being named CEO of VMware in July 2008.

PRELIMINARY RESULTS

EMC also reported a preliminary second-quarter profit, excluding items, of 39 cents per share, below the average analyst forecast of 40 cents, according to Thomson Reuters I/B/E/S.

It said quarterly revenue rose 10 percent from a year earlier to about $5.31 billion, beating the average forecast of $5.29 billion.

The company confirmed its previous full-year profit forecast of $1.70, below the average analyst estimate of $1.73. It repeated its annual revenue outlook of $22 billion, compared with the average estimate of $22.10 billion.

Meanwhile, VMware reported that second-quarter revenue rose 22 percent from a year earlier to $1.12 billion compared with the average analyst forecast of $1.11 billion. It said it expects full-year revenue of $4.54 billion to $4.64 billion, compared with the Street view of $4.58 billion.

The shares of EMC, the world's biggest maker of corporate data storage equipment, were quoted at $24.50 in extended trading, up 7 percent from their close of $22.92 on the New York Stock Exchange. VMware was quoted at $85, up 6 percent from the close.

(Additional reporting by Supantha Mukherjee and Himank Sharma in Bangalore and Nicola Leske in New York; editing by M.D. Golan, Andrew Hay and Andre Grenon)

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