Renaissance Technologies increases position in VMware



Renaissance Technologies and VMware

Renaissance Technologies has increased its position in VMware (VMW) by over $53 million, and the stock represents 0.13% of the total portfolio in 4Q14, up from 0.01% in the third quarter.

VMW has a 0.07% exposure to the iShares Russell 1000 Growth ETF (IWF). The ETF tracks the overall performance of 681 publicly traded companies in the growth sector. In addition, Renaissance Technologies started a new position in technology companies like Apple (AAPL), increased its position in information technology giant IBM (IBM), and sold off its stake in Intel (INTC).

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Overview of VMware

VMware provides virtualization infrastructure solutions. The company develops products in the software defined data center (or SDDC), end user computing, and hybrid cloud computing areas. In 2004, storage giant EMC acquired VMware, which soon became the leader in the virtualization infrastructure solutions.

By employing VMware’s software, computers can run different operating systems. This gives EMC an edge over its peers, including Oracle (ORCL), Cisco Systems (CSCO), and IBM (IBM).

VMware teams up with partners in the mobile cloud era segment

In February 2015,VMware announced programs for the VMware Partner Network where partners from around the world will be attending the VMware Partner exchange this year in order to learn about the latest “VMware software-defined data center and end-user computing and hybrid cloud solutions”.

The senior vice president at VMware, Dave O’Callaghan, stated, “As companies face new challenges in this liquid business environment, the ability to deliver dynamic services offers new and exciting opportunities for our partners. At Partner Exchange, we look forward to closely engaging with our partners to capitalize on these new opportunities in this services-centric world.”

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VMware partners with Google on enterprise cloud product

Last month VMware announced collaboration with Google in order to improve on its cloud services for enterprise customers. As per the agreement, VMware will integrate the Google Cloud platform with VMW’s Cloud Air. The company expects the product to be available by late 2015. Google and Apple (AAPL) have been competing in order to gain market share in the enterprise space.

VMW posts net income drop in 3Q14

VMware announced its 3Q14 results in November 2014 with revenues of $1,515 million compared to revenues of $1,289 million for 3Q13, which shows a growth of over 18%. Net income for the third quarter was $194 million, or $0.45 per diluted share, down 26% per diluted share compared to $261 million for 3Q13.

Pat Gelsinger, CEO of VMware stated, “In every region of the world, customers are making a long-term bet on VMware to help them transform their businesses and embrace a new model for IT. Customers are looking to VMware for technology choices that liberate them from the constraints of hardware, and which offer a new model for security, optimized for a world of millions of applications.”

EMC reviews plan to spin off VMware

In February 2015, EMC decided to dump its plan to spin off its 80% stake in VMware. Elliott Management, an activist hedge fund that owns a 2.2% stake in EMC, wanted the firm to spin off its stake in VMware last year. In January 2015, Elliott Management abstained from pressuring EMC in exchange for adding two new independent directors on the company’s board.

Elliott Management contends that EMC’s structure that combines several businesses obscures the overall valuation of the firm. EMC has however decided to reject Elliott Management’s decision to call for a spin off, as it believes that VMware is an integral part of the firm’s business model. Analysts believe that EMC trades at a discount, and a spin-off of VMware would help the firm to realize its true value.


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