By Tess Stynes
Hedge-fund manager Elliott Management Corp. said it sent a
letter to the board of EMC Corp. urging the data-storage company to
spin off its VMware Inc. unit as well as pursue other
merger-and-acquistion opportunities.
An EMC spokesman couldn't immediately be reached to comment.
The activist investor has a 2.2% stake in EMC, making it one of
the company's largest shareholders. In the letter dated Wednesday,
Elliott is critical of EMC's so-called federation structure, under
which the company's VMware, Pivotal, RSA and EMC II--which mostly
comprises the storage company--are run as independent
companies.
The activist investor asserts that the structure is only viable
under the leadership of its current chief executive, Joe Tucci. Mr.
Tucci, has indicated he will step down by early next year and has
yet to announce a successor.
Elliott maintains the structure, while it may have served EMC
well in the past, no longer does and has contributed to the stock's
underperformance.
Elliott also argues that under the current structure, EMC II and
VMware can't benefit enough from the combined businesses, or
eliminate confusion among customers, employees and investors.
Write to Tess Stynes at tess.stynes@wsj.com
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