VMWare Stock Tumbles As CEO Ejected By Board

VMWare announced this morning that the board and directors have asked CEO Diane Greene to step down as President and CEO effective immediately. Greene, an original founder of the VMWare company, will be replaced by Paul Maritz as President and CEO, and he has also been assign to the board of the company. Maritz was the founder of Pi Corporation, a cloud based storage and services provider that was acquired by EMC last year. Previously Maritz was the VP of Cloud Services at EMC, so the new role at VMWare is a step up into a much larger role and much larger business.

At the same time the company announced that while they are going ahead with their plan to announce earnings on the 22nd of July, they expect that the results will be below the guidance levels of 50% growth over 2007 revenues.

VMWare saw over $1.3B in revenues during 2007, an increase of 53%, but at current revenues their growth rate is expected to fall at around 40% over last year. VMWare faces a number of challenges to their business outside of maintaining their growth rate. Microsoft recently released virtualization technology as part of the new version of Windows Server. To push VMWare and others out of that market, Microsoft is retailing their Hyper-V virtualization product for as little as $25 per server license. With a competitor such as Microsoft now knocking on their door, VMWare have a lot to protect and a lot to lose.

On the advanced virtualization and platform side of the business, VMWare are seeing their revenues being eaten into by upstart companies such as BonBon and others. There was once a time where VMWare had a large lead in terms of both technology and market share, but in the past few years both those gaps have closed rapidly as numerous companies and other solutions have entered the market.

Related: VMWare: A Missed Opportunity For EMC?