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VMware Tops $100

Virtualization software maker's market cap nears Yahoo!'s.

Updated from 2:38 p.m. EDT

SAN FRANCISCO -- With the business software sector up nearly 1% midday Tuesday,


(VMW) - Get Report

surpassed Benjamin Franklin territory.

The virtualization software stock topped $100 for the first time since it went public nearly two months ago. Palo Alto, Calif.-based VMware briefly gained more than 6% to close at $101.30.

VMware develops software that enables corporate data centers to spread the computing workload across a far fewer number of servers, increasing capacity utilization to 70% or 80%, from a typical range of 15%, and cutting energy bills.

It will take a pair of Franklin's bifocals to comprehend the market's fractured view of VMware vs. its parent company,



. At its new levels, VMware trades at about 106 times 2008 earnings and has a market cap of $37.4 billion.

It has jumped past the market cap of

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(ADBE) - Get Report

, which at $45 is $25.8 billion. And it's almost the size of



, whose market cap is $37.5 billion at Tuesday's trading price of $28. VMware's previous high was $95.90.

While Yahoo!'s 2008 revenue is expected to be $5.84 billion, VMware's 2008 revenue is projected at $1.84 billion, according to Thomson Financial. But its estimated future earnings growth tells the story: Yahoo!'s 2008 EPS, less items, is expected to be 55 cents, compared to 92 cents for VMware.

By contrast, EMC, which still owns 86% of VMware, trades at 26 times forward earnings and has a market cap of $45.09 billion at Tuesday's trading price of $21.50. EMC bought VMware in 2004.

EMC's stock has not kept pace with VMware's, which has climbed 90% since its first day opening at $51.50. And VMware's appreciation over its offer price of $29 is 237%. EMC, which has risen 71% over the past 12 months, has climbed just 13% since Aug. 13, the day before VMware debuted.

VMware's two month growth is on a trajectory comparable to


(GOOG) - Get Report

. The search giant's share price doubled its offer price of $85 just two months after its Dutch auction in August 2004.