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EMC's Tucci Likes His Company Just the Way It Is

After temporarily quieting an activist investor, EMC say its unusual corporate structure is an advantage.

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Data storage and IT giant EMC said today that investments in six new initiatives could yield as much as $7 billion in new revenue by 2018, but it made no news on other unanswered questions such as who will be its next CEO.

At a meeting with financial analysts in New York, executives — including CEO Joe Tucci, VMware CEO Pat Gelsinger and Pivotal CEO Paul Maritz — offered a spirited defense of EMC’s unusual corporate structure, which has been criticized by an investment fund seeking to break it up.

Tucci, in both a presentation and a Q&A session with analysts, defended the collection of companies assembled mostly through a long series of acquisitions — which includes its core operations knowns as EMC2, VMware, Pivotal and the security firm RSA, a company that’s well suited to help customers address complicated issues with their IT systems. The latest addition to that federation is VCE, which was previously in a joint venture with Cisco Systems and which EMC bought out last year.

“I challenge you to find a company that can take us on technology assets,” Tucci said. “When we acquire we keep the talent and get value from it. We have a tremendous ability to keep talent, and to attract talent.”

In his own presentation, CFO Zane Rowe also defended EMC’s structure as important to its ability to invest in new efforts he expects to pay off in the coming three years. He named six new products or EMC subsidiaries that he argued would have been unlikely to thrive without the backing of the larger EMC corporation: Scaleio and Xtremio, two flash-based storage products; the software development firm Pivotal; a new enterprise storage product DSSD that EMC acquired last year; AirWatch, a mobile device management company; and NSX, a networking technology based on software.

Rowe said the investments in those initiatives should collectively reach the break-even point by next year and account for $7 billion in revenue and as much as 50 cents in earnings per share by 2018. “These investments wouldn’t get to scale without the backing of the federation,” Rowe said.

Left unaddressed were some of the larger and more fundamental issues facing EMC. Tucci, 67, gave no hints concerning who might succeed him as EMC’s CEO. Speculation has centered on David Goulden, 54, head of the data storage company EMC2 and the federation’s former CFO, as the most likely successor, but the company was mum on this topic today.

Tucci and the other executives said there are no plans for EMC to break VMware off from the federation. The cloud software company of which EMC is the majority shareholder is responsible for most of EMC’s $55.4 billion market capitalization.

Asked during a Q&A session whether or not EMC might buy the portion of VMware that it doesn’t already own, Tucci said, “It’s an option but it’s not the plan.”

Tucci also said plans are still on track for Pivotal to take itself public eventually, which would make it the third publicly held entity under the EMC umbrella after VMware. “That is still the plan. There’s no change there,” Tucci said. “I’m not going to give you a date, but we have not changed the plan. It’s the VMware plan all over again.”

EMC shares fell more than 3 percent on the New York Stock Exchange. The company has been under pressure from the activist investor firm Elliott Management, which argued last year that VMware should be spun off in order to free up value for shareholders. EMC reached a temporary standstill agreement with Elliott in January and has agreed to add a few directors to its board. That agreement expires in September. Elliott argued in a letter to investors last year that the company should be broken up.

This article originally appeared on Recode.net.