VMware CEO Pat Gelsinger
Jonathan Vanian
By Aaron Pressman and Adam Lashinsky
July 3, 2018

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

As we head into the 4th of July holiday, this will be the last issue of Data Sheet for the week. We’ll be back in your inbox on Monday, July 9. Adam and I hope you have the opportunity to recharge and relax as we all celebrate Independence Day.

And speaking of maintaining independence, it’s been quite a few weeks for Pat Gelsinger, the boy genius chip designer who now runs VMWare. Gelsinger got his start as a quality control tech at Intel and the company helped pay for him to go to college. He rose through ranks as the youngest ever this and first ever that, eventually leading the design of Intel’s 486 chip line. In 2001, he was named the first chief technology officer in Intel history. But when a relatively young CEO, Paul Otellini, seemed to block Gelsinger’s path to the top, he jumped ship and joined EMC. Within a few years, he got that CEO job, running EMC’s majority-owned but independently run software developer, VMWare.

So when Intel CEO Brian Krzanich was forced to resign two weeks ago, the spotlight immediately turned to one of the chipmaker’s almost-CEOs who got away. Gelsinger shut down that speculation and quick, tweeting: “I love being CEO @vmware and not going anywhere else. The future is software!!!” An hour later, Gelsinger’s current boss, Michael Dell responded to the tweet with a “You’re the best” cartoon.

The open CEO seat may have come at an opportune time to increase Gelsinger’s leverage, though. Dell has been trying to reorganize, simplify its corporate structure, and find a way to become a public company once again. Since acquiring EMC and the controlling stake in VMWare two years ago, Dell had kept Gelsinger in charge and allowed the boy wonder to do his thing. VMWare’s revenue was up a healthy 12% to almost $8 billion last year and the stock has gained 89% over the past year, including a 10% jump on Monday alone.

But one move under consideration at Dell would have been to wholly acquire VMWare, fully subsume it as part of the Dell empire, and turn its publicly traded stock into currency for Dell. That could have been a morale killer for VMWare employees and hurt its critical relationships with hardware partners that compete with Dell.

In the end, Michael Dell and his private equity buddies went another way, buying out the tracking stock they created for the EMC acquisition for $22 billion. VMWare keeps its stock–and its independence–though not without some cost. Gelsinger will have to raid VMWare’s coffers to pay a special dividend, the lion’s share of which will go to Dell and be used for the tracking stock buyout. The decision not to fully consume VMWare prompted that 10% jump in its stock on Monday. For Pat Gelsinger, there will be much to celebrate on this 4th of July. But he’ll celebrate quickly. Later this month, he’s off to Africa to climb Mt. Kilimanjaro to raise money for a high school for girls in Kenya (you can help, too).

———

In yesterday’s Data Sheet I misspelled the name of University of South Carolina history professor Allison Marsh. My apologies.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

SPONSORED FINANCIAL CONTENT

You May Like