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Protocol | Enterprise

For VMware, replacing CEO Pat Gelsinger will be hard. Navigating the relationship with Dell will be harder.

Two early contenders for the role of CEO are operating chiefs Sanjay Poonen and Raghu Raghuram.

Incoming Intel CEO Pat Gelsinger

Pat Gelsinger is leaving VMware after eight years.

Photo: VMware

VMware CEO Pat Gelsinger's jump to Intel comes at a particularly precarious time for the company as it navigates a potential spinoff of the business from majority owner Dell.

Chief Financial Officer Zane Rowe is taking over the reins of the virtualization software provider temporarily as the board looks for a permanent replacement, according to a company statement on Wednesday. Two early contenders for the role are operating chiefs Sanjay Poonen and Raghu Raghuram, according to Morningstar analyst Mark Cash.

Whoever becomes the replacement faces a difficult undertaking. VMware is a complex organization, a challenge that Gelsinger navigated well in his more than eight years with the company, but still poses a potential hurdle for an outside replacement. Most urgently, however, will be the Dell problem. The company has an 80% stake in VMware, but is looking to spin off the business as it struggles to bolster its own balance sheet, a move that could force VMware to pursue cost-cutting initiatives and find new areas of growth.

"We view the management transition as an additional but manageable hurdle," RBC Capital Markets analysts wrote in a note to investors. VMware "will need a sizable debt raise and special dividend in order for Dell to complete a successful spin, and a new CEO will be an important part of such a move."

Any change in the ownership structure of VMware is unlikely to happen until September 2021 at the earliest, but it will still be imperative for a CEO to be named quickly to help with any transition. VMware has a special committee tasked specifically with negotiating with Dell.

"There's a lot of opportunity for someone to stamp their name on the company," Cash told Protocol.

The news comes after former Chief Operating Officer Rajiv Ramaswami left in December to lead rival Nutanix, a departure that clearly irked VMware. The company is suing Ramaswami for allegedly holding "secret meetings" with Nutanix while serving at VMware, a move that indicates just how fiercely the two firms compete.

Outside of Gelsinger and Ramaswami's departures, there were a few other high-level defections over the past year: Chief Customer Officer Scott Bajtos jumped to FinancialForce, general manager Ajay Singh left to be the chief product officer at Pure Storage, cloud services general manager Milin Desai departed to be CEO at Sentry, SVP Jim Delia left for ServiceNow, and senior director of global partner operations Jeanine Bierlein went to Zoom, among others.

"Leadership change is a natural part of every company's evolution," VMware said in a statement. "We have [a] strong executive bench across the company and are investing heavily in preparing our leaders to take on larger, higher impact roles as new opportunities arise. Interest from executive candidates in our company remains strong."

But Gelsinger leaving is, of course, the most significant, given the major impact he had on the company, taking it from a $4.6 billion midsize provider in 2012 to a $10 billion burgeoning power-player in the hybrid cloud industry. In that time, the stock price rose nearly 44%.

Gelsinger "profoundly pivoted the company over the last few years, turning VMware into a key component of cloud infrastructure while expanding into high-growth vectors and away from core virtualization solutions," Cash wrote in a note to investors.

Gelsinger also struck an important partnership with AWS in 2016 to allow VMware customers to run core products on its cloud. That, along with agreements with Microsoft and Google, will be paramount for any successor to continue. Gelsinger was also instrumental in pivoting the company's focus to Tanzu, a tool that effectively helps clients manage their applications across different cloud providers.

Gelsinger will remain on the board, but given the monumental task facing him at Intel, some industry insiders questioned his capacity to also help out his former employer. Investor hesitancy over any incoming new CEO was apparent, with the stock dropping as much as 7% in the hours following the news.

"It's a loss. No other way to say it. Pat is a key technical leader in the organization," IDC President Crawford Del Prete said. Still, the company "is in a strong position and is a key part of many customer's enterprise strategy."

Protocol | Workplace

The pay gap persists for Black women

"The pay gap is a multifaceted problem and any time you have a complex problem, there's not a single solution that's going to solve it."

For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Photo: Christine/Unsplash

Last year's racial reckoning following the murder of George Floyd led many tech companies to commit to promoting equity within their organizations, including working toward pay equity. But despite efforts, the wage gap for Black women still persists. For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Black Women's Equal Pay Day on Tuesday represents the estimated number of days into the year it would take for Black women to make what their white, non-Hispanic male counterparts made at the end of the previous year, according to the organization Equal Pay Today. And while the responsibility to fix the pay gap falls mostly on companies to rectify, some female employees have taken matters into their own hands and held companies to their asserted values by negotiating higher pay.

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Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

pay

What comes to mind when you think of AI? In the past, it might have been the Turing test, a sci-fi character or IBM's Deep Blue-defeating chess champion Garry Kasparov. Today, instead of copying human intelligence, we're seeing immense progress made in using AI to unobtrusively simplify and enrich our own intelligence and experiences. Natural language processing, modern encrypted security solutions, advanced perception and imaging capabilities, next-generation data management and logistics, and automotive assistance are some of the many ways AI is quietly yet unmistakably driving some of the latest advancements inside our phones, PCs, cars and other crucial 21st century devices. And the combination of 5G and AI is enabling a world with distributed intelligence where AI processing is happening on devices and in the cloud.

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Alex Katouzian
Alex Katouzian currently serves as senior vice president and general manager of the Mobile, Compute and Infrastructure (MCI) Business Unit at Qualcomm Technologies, Inc. In this role, Katouzian is responsible for the profit, loss and strategy of the MCI BU, which includes business lines for Mobile Handset Products and Application Processor Technologies, 4G and 5G Mobile Broadband for embedded applications, Small and Macro Cells, Modem Technologies, Compute products across multiple OS’, eXtended Reality and AI Edge Cloud products.
Protocol | Workplace

Tech company hybrid work policies are becoming more flexible, not less

Twitter, LinkedIn and Asana are already changing their hybrid policies to allow for more flexibility.

Photo: FG Trade/Getty Images

Twitter, LinkedIn and Asana are all loosening up their strategies around hybrid work, allowing for more flexibility before even fully reopening their offices.

In the last week and a half, Twitter announced it's adopting an asynchronous-first approach, and both Asana and LinkedIn said they would increase the amount of time their employees can work remotely.

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Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Power

Activision Blizzard scrambles to repair its toxic image

Blizzard President J. Allen Brack is the first executive to depart amid the sexual harassment crisis.

Activision Blizzard doesn't seem committed to lasting change.

Photo: Allen J. Schaben/Getty Images

As Activision Blizzard's workplace crisis rages on into its third week, the company is taking measures to try to calm the storm — to little avail. On Tuesday, Blizzard President J. Allen Brack, who took the reins at the developer responsible for World of Warcraft back in 2018, resigned. He's to be replaced by executives Jen Oneal and Mike Ybarra, who will co-lead the studio in a power-sharing agreement some believe further solidifies CEO Bobby Kotick's control over the subsidiary.

Nowhere in Blizzard's statement about Brack's departure does it mention California's explosive sexual harassment and discrimination lawsuit at the heart of the saga. The lawsuit, filed last month, resulted last week in a 500-person walkout at Blizzard's headquarters in Irvine. (Among the attendees was none other than Ybarra, the new studio co-head.)

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Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Protocol | Workplace

Alabama Amazon workers will likely get a second union vote

An NLRB judge said that Amazon "usurped" the NLRB by pushing for a mailbox to be installed in front of its facility, and also that the company violated laws that protect workers from monitoring of their behavior during union elections.

An NLRB judge ruled that Amazon has violated union election rules

Image: Amazon

Bessemer, Alabama warehouse workers will likely get a second union vote because of Amazon's efforts to have a USPS ballot box installed just outside of the Bessemer warehouse facility during the mail-in vote, as well as other violations of union vote rules, according to an NLRB ruling published Tuesday morning.

While union organizers, represented by the Retail, Wholesale, and Department Store Union, lost the first vote by more than a 2:1 margin, a second election will be scheduled and held unless Amazon successfully appeals the ruling. Though Amazon is the country's second-largest private employer, no unionization effort at the company has ever been successful.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

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