SAN FRANCISCO -- Investors slammed VMware (VMW) - Get Report shares Tuesday after the company warned that 2008 revenue will be lower than projected.

The company also announced the replacement of CEO and co-founder Diane Greene.

Paul Maritz, whose start-up company was recently acquired by VMware majority-owner

EMC

(EMC)

was named president and CEO, effective immediately.

VMware was recently off more than 30% to $36.82. EMC shares were off $1.49, or 9.8%, to $13.65.

VMware's 2008 revenue will be "modestly below the previous guidance of 50% growth over 2007," the company said in a statement, indicating a steep drop. The company had projected revenue of $2 billion and had already reported 69% revenue growth year over year for the first fiscal quarter.

The company said it won't revise guidance for second-quarter revenue of $460.1 million. Analysts were expecting $462.4 million, or 56% year-over-year growth, according to Thomson Reuters. VMware is due to report earnings July 22.

Until recently, VMware has had few strong competitors in the virtualization market. But in June,

Microsoft

(MSFT) - Get Report

fully released its virtualization capability, which had already been downloaded 1 million times in beta form, for the Windows Server 2008.

VMware's board is turning to a former Microsoft executive to lead the company. Maritz managed the development and marketing of the successful Windows 95 and NT operating systems and database software. He left the company in 2000, founding Pi Corp., which EMC acquired in February 2008. Maritz became president of the EMC's cloud-computing division.

"VMware's Board of Directors is very pleased to be able to appoint an executive with Paul's experience and track record to lead VMware to its next stage of growth and development," VMware and EMC Chairman Joe Tucci said in a statement. "He has decades of experience building one of the greatest franchises in software history, Windows. Paul was instrumental as part of the core executive leadership team in building much of Microsoft's success.

"VMware is in a tremendous position to extend its lead in the virtualization market."

Greene co-founded VMware with her husband, Mendel Rosenblum, who is chief scientist. EMC acquired the company in 2004 and took VMware public Aug. 13, 2007.