VMware Drops Plans to Launch Joint Cloud Venture with EMC

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VMware said on Monday that it will no longer be part of a cloud services joint venture called Virtustream with EMC which was expected to launch in Q1 2016. VMware made the announcement in a one-line statement in a regulatory filing.

Announced in October, the new business unit was supposed to include cloud services from EMC, VMware and Virtustream, the cloud services provider EMC acquired in May for $1.2 billion.

The joint business was to be jointly owned 50:50 by VMware and EMC. According to Silicon Valley Business Journal, it was estimated that would hit VMware’s adjusted bottom line next year by between $200 million and $300 million.

The Virtustream announcement has been blamed for contributing to a 25 percent decline in VMware share value over the last two months, according to a report by the Re/Code. It was supposed to be a part of the acquisition of EMC by Dell.

Shareholders in EMC and VMware were displeased with the plans for the joint venture, calling it a “dumping ground” for money-losing assets, Re/Code said.

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