Executive changes are afoot at VMware (NYSE: VMW). Some investors appear worried about potential slowing growth at the  virtualization and cloud computing giant. For channel partners there's no cause for panic. Compared to most rivals, VMware is still growing like a weed and the company has a deep management team, some of whom are being promoted into more strategic positions.

Nathan Eddy

April 11, 2012

2 Min Read
VMware CFO Departure: Investors Worry, Partners Rally

vmware

Executive changes are afoot at VMware (NYSE: VMW). Some investors appear worried about potential slowing growth at the  virtualization and cloud computing giant. For channel partners there’s no cause for panic. Compared to most rivals, VMware is still growing like a weed and the company has a deep management team, some of whom are being promoted into more strategic positions.

Indeed, former co-president of customer operations Carl Eschenbach has been promoted to COO, and former GM and SVP Raghu Raghuram has been promoted to EVP of cloud infrastructure and management.

But the piece of news that has investors a little worried: Mark Peek, VMware’s CFO and co-president of business operations, has decided to decamp to enterprise business management software firm Workday. Peek currently serves as a Workday board member will become Workday’s CFO in June. Peek will stay on with VMware in the meantime, while VMware starts the CFO headhunt process.

Growing Really Fast… But Fast Enough?

VMware, which rolled out new partner specializations in February,  also announced that financial results for the quarter ended March 31, 2012 are expected to broadly meet or slightly exceed the range of financial guidance it provided January 23, 2012. As you may recall, the company reported Q4 revenues of $1.06 billion, up 27 percent from Q4 2010, while Q4 operating income hit $214 million, up 64 percent from Q4 2010.

For channel partners specializing in cloud computing and virtualization, demand for VMware-related products continues to grow swiftly. But investors seem nervous about VMware’s CFO departure and earnings outlook. VMware shares dipped 2.5 percent today while the broader U.S. markets rose.

The VMware Team

Still, VMware has a deep management team focused on growth.

Eschenbach joined VMware in 2002 as the first head of Americas Sales, helping grow the company’s revenue from $8 million to the $3.77 billion achieved in 2011. Eschenbach has been a key player in constructing the sales, global partner and alliance operations, marketing and support/services organizations to their current size of 6,000 people.

VMware CEO Paul Maritz released a statement full of back-slapping congratulations for Eschenbach, lauding his leadership, integrity, passion, business sense, and Raghuram, who joined the company in 2003, for his ability to “uniquely straddle the technical and business side of products.”

Maritz also had warm words for Peek, who helped take VMware public in 2007. “He helped steer the extraordinary growth that VMware has achieved over the years and has built a great team of finance and operations professionals that will stand us in good stead in the future,” Maritz said.

Good times, noodle salad, as Melvin Udall would say.

Additional insights from Joe Panettieri.

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