By Jessica Shambora
July 10, 2008

The news that EMC

has no intention of spinning off VMware

and expects lower than projected revenue growth for the company in 2008 are the primary reasons the two companies lost $8 billion in combined stock-market value over the last few days.

Another factor is the departure of VMware CEO Diane Greene, the company’s chief since she founded the software firm with engineer husband, Mendel Rosenblum, in 1998. EMC CEO Joseph Tucci reportedly said VMware had outgrown Greene’s leadership skills, and when Greene reportedly refused to take another position at VMware she was fired.

Anyone who knows Greene knows she’s impatient, peripatetic and inclined to chart her own course. Number 22 on Fortune’s Most Powerful Women list, Greene is an independent, free-spirited entrepreneur, as my colleague Adam Lashinsky portrayed her last fall in Fortune’s 2007 Most Powerful Women in Business issue.

Greene’s “boring life ,” as she called it, started when she settled in Silicon Valley following a stint at Windsurfing International (she’s an avid sailor). She jumped from Sybase to Tandem to Silicon Graphics

, then to two startups.

At VMware – which offers “virtualization” technology that tricks servers and computers into running multiple operating systems – she maintained her independent streak. She reluctantly sold her startup to EMC for $625 million in 2003.

However, the companies remained entirely separate entities. Greene says after inking the deal she realized that association with EMC threatened VMware customers IBM

, HP

, Dell

and others who were its now-parent company’s direct competitors.

Only an anti-establishment type like Greene would frame her shot to stardom as “boring.” EMC spun off a piece of VMware in an August IPO last year that raised more than $1 billion. It achieved the highest market valuation since Google

went public in 2004. VMware’s stock rose from $29 to $52 on the first day of trading.

Despite such success, Greene’s departure is not so suprising. VMware’s stock fell steadily since reaching its $125 peak last fall. Meanwhile Greene and her crew continued to clash with EMC’s senior executives. Reportedly Greene was pushing for VMware to be spun off early next year. And as her husband pointed out to Lashinsky last year, “If you look at her resume, this is far longer than any other job she has ever held.”

Now as former Microsoft

executive Paul Maritz takes charge at VMware, Greene is likely headed for another big adventure. As Tucci told Fortune last year, “The No. 1 item that makes anyone successful is passion. Never bet against a person with passion. She [Greene] has an intense desire to win.” –Jessica Shambora

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