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VMware's sales disappoint, shares plunge

Summary

Virtualization specialist reports sharp rise in earnings, but sales fall short of what some analysts had been expecting. Shares fall more than 25 percent in after-hours trading.

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VMware took in less money on virtualization software than expected in the fourth quarter, leading to a steep drop in the company's shares.

The software maker said Monday that it earned US$78 million, or 19 cents per share, as compared with US$31 million, or 9 cents per share in the prior quarter. Its sales were also up sharply, to US$412 million, though that was slightly less than the average analysts' forecast.

After the report, VMware shares plummeted more than 25 percent in after-hours trading. As of 3 p.m. PST, its shares were trading at US$60.60, down US$22.40 or more than 26 percent.

In a statement Monday, CEO Diane Greene praised the company's position, even as it faces a stepped-up attack from Microsoft and other rivals.

"We begin 2008 with more than 100,000 customers, 500 technology and consulting partners, nearly 10,000 go-to-market partners, and more than 5,000 employees," Greene said. "As others begin to enter the market, VMware and our partners are continuing to broaden and deepen our highly reliable end-to-end virtualization solutions."

This article was first published as a blog on CNET News.com.

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