Data storage products manufacturer EMC Corp. announced plans to buy out a portion of Cisco Systems Inc.'s take in their joint venture called VCE for a value that remains undisclosed.
VCE, an acronym for virtual computing environment was established back in 2009 alongside investors like VMware and Intel Corp.
It serves as a one-stop- for data centers, bundles Cisco's networking equipment and servers with EMC's storage gear and software from EMC's virtualization software unit VMware Inc.
EMC announced on Tuesday that it would provide a media release in Wednesday morning to discuss about the new business venture beside its scheduled financial report results.
According to Reuters, there has been reports that EMC and Cisco have been
on each others nerves which suggests that the partnership was already failing. The venture also allegedly reported cumulative losses which totalled $644 million since its inception in 2009.
Meanwhile, several activist investors have pushed EMC to merge with VCE or explore spinoff possibilities including Elliot Managemetn and Paul Singer.
Cisco, currently holding a 35 percent stake in the join venture VCE, and 63 percent last September based on the EMC filing in August.
Cisco will still have a 10 percent stake in VCE following the transaction.
How the companies account for their VCE investments will change after the transaction, and EMC will have a little more control over the joint venture, said one person familiar with the matter.
EMC, who shelled out $1.26 billion to VCE said it will combine VCE into its current business, but this will have no impact on its 2014 financial results
"We view the Cisco/VCE news as a 'yawner' given that EMC right now is facing a plethora of growth and strategic challenges and the last thing on investors' minds is the future of VCE," FBR Capital Markets analyst Daniel Ives wrote in a note to clients.
