Joseph ‘Joe’ Tucci, chairman and chief executive officer of EMC Corp., may respond to breakup appeal from Elliott Management.
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Elliott Management has revealed a $1 billion stake in the software company.

By Laura Lorenzetti
July 21, 2014

EMC EMC , a provider of computer server and storage systems, is coming under pressure to break itself apart after Elliott Management revealed a $1 billion stake in the company.

Elliott’s investment comes to about 2% of EMC’s $55 billion market value and makes it the software company’s seventh-largest shareholder, according to Bloomberg data.

The investment management firm is leveraging its position to sway EMC to spin off VMware VMW , a publicly-traded software maker that is 80% owned by EMC. Elliott believes the Hopkinton, Mass.-based company would get a substantial stock price boost from the sale, reported The Wall Street Journal.

EMC sales have slowed in recent years, and its shares have trailed the S&P 500 index over the last 12 months. EMC gained almost 7% versus a 16.7% rise in the benchmark index in the last year. The company will report second-quarter results Wednesday.

An EMC spokesperson was not immediately available for comment.

EMC spun off Pivotal, an enterprise IT company, 18 months ago and runs the business in a similar way to VMware. Pivotal CEO Paul Martiz spoke at Fortune‘s Brainstorm Tech conference last week and referenced the spin off as “a repeat in a different for of the VMware play.”

While there hasn’t been mention of also breaking off the newer Pivotal business, it could provide activists another reason to drive a sell-off of VMware since EMC could still maintain a presence in the enterprise-software arena.

Martiz’s full conversation with Fortune‘s Adam Lashinsky can be heard below.

An earlier version of this story incorrectly stated that EMC had a market capitalization of $55 million. The company has a market cap of $55 billion.

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