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VMware Inc. (VMW) shares were rising sharply Friday after the software group controlled by Dell Technologies Inc.  (DVMT) posted stronger-than-expected third quarter sales in its cloud computing business.

VMware shares were rose 3.7%. 

VMware said sales for the three months ending on November 2, the group's fiscal third quarter, rose 14% to $2.2 billion and topped Street forecasts as License revenue jumped 17% to $884 million. Net income for the quarter fell 15.4% to $334 million, the company said, thanks in part to a $161 million charged based on its investment in Pivotal Software.

"Q3 was another strong quarter, and we're pleased with our results, which continue to be driven by broad-based strength across our diverse product portfolio and in all three geographies," said CEO Pat Gelsinger. "Our successful annual VMworld events featured many new product, partnership and acquisition announcements-demonstrating continued innovation and investment in our strategy for the future."

VMware shares were marked 9.1% higher in pre-market trading in New York, indicating an opening bell price of 176.30 each, a move that would extend the stock's year-to-date advance past 35% and value the Palo Alto, Calif.-based group at just over $72 billion.

The move is also likely to intensify the debate surrounding Dell's plans to exchange shares of its Class V stock, which tracks the tech company's stake in VMware, for $109 per share in cash and stock in the parent company Dell.

The exchange would return the tech group, which Michael Dell and Silver Lake took private in 2013, to the public markets. However, activist investors such as Carl Icahn and P. Schoenfeld Asset Management have argued that the offer undervalues the tracking stock, which now trades at a $68.80 discount to VMware based on pre-market trading levels.

Icahn's Icahn Capital LP has also argued that International Business Machine's (IBM) recent purchase of Red Hat Inc. (RHT) for $34 billion, or $190 per share, implies $300 per share for VMware, a lofty valuation for the underlying security.

Activist P. Schoenfeld Asset Management has suggested that Dell should pay $130 per share for the tracker, with shareholders scheduled to vote on the proposal on December 11.