EMC Execs Jockey for Position
Wags say exec movement puts candidates for next CEO in the starting gate
August 10, 2006
This week's management shuffle at EMC is leading industry insiders to wonder whether one of the promoted execs is being groomed to succeed Joe Tucci as CEO. (See EMC Shuffles Execs.)
Not that Tucci's ready to exit yet. But EMC gave new responsibilities to Bill Teuber, Dave Donatelli, David Goulden, and Dave DeWalt to set up an interesting CEO succession derby if the 58-year-old Tucci decides to step down in the next few years.
"They made it a horse race," says a Wall Street analyst who asks to remain anonymous. "If they're doing this now, it shows Tucci can't be that far away from retiring, maybe a couple of years."
EMC spokesman Greg Eden says the moves were not made with CEO succession in mind, but that hasn't stopped the handicappers from assessing the field.
"There's a bunch of guys in the running," the analyst says. "They've been expanding Teuber's role and broadening his responsibilities. The same with Donatelli. And they could be making Goulden CFO so he sees that side of the business."Teuber, appointed vice chairman in May, will give up his CFO role to help Tucci run the company. (See EMC Promotes Execs.) Goulden moves from head of customer relations to CFO. Donatelli, EVP of storage operations, previously handled storage systems, but gets his role expanded to include development of software, primarily backup-and-recovery and storage virtualization.
DeWalt was shifted from president of EMC software to president of customer operations and content management software. DeWalt, former Documentum CEO, will run the Documentum operation but not the Legato backup unit. When backup revenue declined sharply earlier this year, Tucci blamed poor Legato sales on the decision to combine backup and content management into a single sales force. (See EMC Hiccups, Waits for Clariion.)
While a shift in the CFO position could make investors nervous in these days of options backdating scandals, analysts characterize EMC's moves as promoting successful executives to fix some problems that have surfaced in recent quarters. (See Tucci: EMC's Problems 'Self-Induced'.)
"We view this transition as an exercise in executive succession planning, rather than a move generated in response to any accounting issues," R.W. Baird analyst Dan Renouard wrote in a note to clients.
Insiders say the moves integrate some of EMC's internal divisions, and also give top execs experience running different parts of the company. Sources say Teuber, Donatelli, and Gould are considered possible CEO successors, along with head of global services Howard Elias and possibly VMware chief Diane Greene."Tucci has said his successor is among the ranks of his top peers," says storage analyst Greg Schulz of StorageIO Group. "If you're grooming a successor, you move them around the company. The more you see them moved around, the more of a sign that they're in line for that chair."
Although EMC hinted at these moves last May at its analyst day, some might find the timing curious. The company was criticized and its stock price dropped sharply last month when it paid $2.1 billion for RSA Security, then experienced its second straight quarter of weak results. (See Did EMC Overpay?)
A.G. Edwards analyst Aaron Rakers writes that moves "should be viewed as a positive. However, some could view these management shuffles as indicative of further turmoil within the ranks of EMC."
But a second anonymous Wall Street analyst says EMC needs to go outside the company to pacify investors.
"Investors are telling me that EMC needs a Mark Hurd," he said, referring to the CEO who has Hewlett-Packard headed in the right direction after 17 months on the job. (See High Hopes in Palo Alto.)Dave Raffo, News Editor, Byte and Switch
EMC Corp. (NYSE: EMC)
Hewlett-Packard Co. (NYSE: HPQ)
Robert W. Baird & Co. Inc.
The StorageIO Group
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