Earlier today, there were reports of EMC finally giving in to activist pressure and it was exploring selling its VMware unit.
But the reports are “not accurate at all,” a source familiar with the matter told Business Insider. The source said they’re not authorised to publicly discuss the matter.
The New York Post reported Thursday morning that Hewlett-Packard was one of the potential buyers for VMWare, citing an unnamed source.
“VMware is more of a distraction than anything else,” the source told the NY Post.
VMware is a cloud virtualization software maker that was acquired by EMC for $US600 million in 2004. EMC owns 80% of VMware and has been saying it had no intention of selling VMware. EMC runs a “federation model” where 3 different businesses run under one big umbrella, with VMware owning the biggest value at roughly $US42 billion.
But in July, activist investor Elliott Management spent more than $US1 billion to take a 2% ownership of EMC, making itself the fifth largest shareholder of the data storage firm.
Since then, Elliot has been pressuring EMC to split off VMware, which was seen as a move to boost EMC’s lagging stock price and attract possible take over bids for EMC from other tech giants, such as Oracle, HP, or Cisco.
EMC CEO Joe Tucci said in its latest earnings call that he would meet with Elliott, but there hasn’t been any reports of the meeting actually taking place yet.
Although the NY Post is not the best-known source for business news, UBS’s Steve Milunovich wrote in a note today that the New York tabloid has been “surprisingly accurate on M&A.” He also wrote, “We increasingly believe something is up,” according to Barron’s.
EMC’s spokesman declined to comment when reached by phone.
EMC shares have remained pretty much unchanged, rising .64% to $US29.69.