EMC Exec: Our Team Is 'Educating' Elliott Management On Federation Strategy

EMC executives aren't worried about Elliott Management and its demand that the company split up the EMC Federation of five companies.

In fact, EMC spends "a good amount of time just educating" Elliott Management about the EMC Federation and why it will succeed in the long run, said Bob Basiliere, EMC's senior director for global account marketing, in a recent interview with CRN at EMC headquarters in Hopkinton, Mass.

"Our executive team has spent a good amount of time just educating Elliott and others, the others around them, as to what it is, why we did it, why we think it's financially viable. Obviously, that's their primary concern," Basiliere said.

[Related: Tucci Sounds Off On Activist Investor Pressure, R&D, And The EMC Federation]

There's significant tension between activist investor Elliott Management, hungry for the gains it says it's not seeing as a result of EMC's commitment to the Federation strategy and pushing for the breakup of the company, and EMC itself, which says the EMC Federation is the key to long-term success.

EMC is under intense pressure from Elliott Management, which holds 2.2 percent of EMC shares. The hedge fund management firm agreed to a nine-month truce in its battle to break up EMC after getting two of its representatives on the EMC board. That truce ends in September.

And far from hunkering down, EMC has been defiant, even plunking down $1.2 billion in late May for cloud management software firm Virtustream.

The EMC Federation's goal is to closely knit together five disparate companies under the EMC flag -- EMC Information Infrastructure, VMware, RSA, VCE and Pivotal -- to position the legacy hardware firm as a solution vendor that can anticipate emerging markets such as cloud, software-defined and hyper-converged infrastructure.

Still, EMC stock has languished at less than $30 a share for the past five years, and activist investors such as Elliott Management have become increasingly restless.

EMC, Basiliere said, has to pay attention to Elliott Management but is determined to stick to its strategy.

"Despite all the best efforts of some of these investor groups who know there would be some short-term value if it was broken up, it's not going anywhere," Basiliere said.

"With the value that those different groups of portfolio products stitched together provide as we talk about cloud and big data, and transformational IT strategies in the next three to five years, we have to stay the course," he said.

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the integration of the five EMC Federation companies continues apace,