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VMware's sales disappoint, shares plunge

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.

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 $78 million, or 19 cents per share, as compared with $31 million, or 9 cents per share in the prior quarter. Its sales were also up sharply, to $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 $60.60, down $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."