Virtualisation software maker VMware stock up 8.1 per cent on growth forecast

Shares of US software company VMware Inc, provider of cloud and virtualisation software and services was up the most in eight months after chief executive officer Pat Gelsinger forecast accelerating revenue growth, allaying concerns over slow movement  into new businesses.

VMware's stock was up 8.1 per cent to $81.37 at the close in New York yesterday, the biggest gain since 18 July. VMware's majority owner EMC Corp too issued an outlook for annual sales growth of at least 8 per cent, that lifted its shares by 1.8 per cent to $24.90.

VMware's revenue would rise 15 per cent in 2014 and as much as 20 per cent in the following two years, the company said at a meeting with analysts. VMware also planned an initial public offering for Pivotal, a joint venture with EMC.

Investors had been seeking evidence of Gelsinger, CEO since September, boosting growth following the acquisition of Nicira Inc, that stepped up VMware's competition with Cisco Systems Inc.

According to Rob Owens, an analyst at Pacific Crest Securities LLC, today's model conversation would serve to allay investor concerns of any material fall-off in growth around the corner. Owens was speaking in an interview.

Pivotal would be formed with assets from both VMware and EMC, and would seek to sell shares to the public, according to EMC CEO Joseph Tucci. The venture would have about $300 million in sales this year, with 69 per cent ownership by EMC and with VMware holding the rest. He did not offer details about the IPO's timing.