Updated from 10:53 a.m. ESTSAN FRANCISCO -- VMware's ( VMW) lower growth outlook for 2008 continues to lash the prospects for EMC ( EMC), while the macroeconomic climate lassoes both tech performers. In its earnings report Monday, VMware
Citigroup analyst Brent Thill revised his VMware price target to $83 and wrote that VMware's 50% revenue growth projection is conservative, "based on VMW's overwhelming market share (80% plus), few legitimate competitors, limited overall market penetration, no major price pressures, and a doubling of headcount in '07" to 5,000 employees. VMware is an investment banking client of the firm. Pritchard also suggested a slowdown in VMware's growth will impact tangential stocks, such as Double-Take Software ( DBTK), or competitors, such as Citrix ( CTXS), which recently acquired open-source virtualization developer XenSource. Double-Take, which sells data protection software, was down $1.49, or 10%, to $16.04 in Tuesday trading. Citrix, a partner of virtualization entrant Microsoft ( MSFT) was off 42 cents, or 1.2%, to $33.68. Thomas Curlin, an analyst with RBC Capital Markets, expects businesses contemplating server upgrades may make a transition from VMware when Microsoft's virtualization-capable Windows operating system is released to manufacturing later this year. And "sources expect Citrix to announce a partnership with a major original equipment manufacturer" for its embedded virtualization technology toward the current quarter, Curlin added. Also posing a longer-term threat to VMware is server virtualization up-and-comer, privately held Virtual Iron, which announced Monday that it had secured another $20 million in funding based on the company's rising value. The infusion brings the company's total venture funding to $65 million. Although the company does not disclose revenue, it claims to be growing faster than the virtualization market rate of 60%.