Aug. 14 (Bloomberg) -- VMware Inc. shares soared 76 percent in their first day of trading, the best technology debut of the year, giving the software maker a bigger market value than Ford Motor Co.

The stock gained $22 to $51 at 4 p.m. in New York Stock Exchange composite trading. Palo Alto, California-based VMware sold 33 million shares yesterday for $29 each, the top end of its forecast range.

The increase gives VMware, bought by EMC Corp. in 2004 for $635 million, a market value $19.1 billion, topping Ford, the second-biggest U.S. automaker. The initial public offering was the largest technology sale since Google Inc.'s three years ago.

``There are not very many opportunities for shareholders to get their hands on companies that are growing at roughly 100 percent annually,'' said Brian Freed, an analyst with Morgan Keegan Inc. in Memphis, Tennessee. He rates EMC shares ``outperform'' and doesn't own any.

VMware makes programs that let server computers run several operating systems, such as Microsoft Corp.'s Windows, allowing one computer to do the work of many ``virtual'' machines.

Underwriters have the option to purchase an additional 4.95 million shares if demand warrants.

In February, Hopkinton, Massachusetts-based EMC announced plans to sell about 10 percent of VMware as newly issued shares in an IPO. EMC will remain VMware's majority shareholder. VMware boosted its forecast price range to between $27 and $29 last week, from $23 to $25 in July.

Price Range

Shares of Data Domain Inc., which makes storage products used to back up information and recover data after a disaster, rose 66 percent in their first day of trading on June 27.

The surge in VMware's stock shows the company didn't raise as much money as it might have, Freed said.

``EMC absolutely left a lot of money on the table,'' he said. In a report last week, Freed estimated that VMware shares would trade for at least $45. The gain in EMC stock this year means ``you probably aren't going to be hearing a lot of crying,'' he said.

EMC shares fell 71 cents, or 3.7 percent, to $18.34 on the New York Stock Exchange. They have risen 39 percent this year.

``You price the offering with input from advisers,'' EMC Chief Financial Officer David Goulden said in an interview. ``We are just happy the stock has opened so nicely.''

Profit Gains

VMware's net income rose 29 percent to $85.9 million in 2006, while sales gained 82 percent to $703.9 million, according to regulatory filings. In the first quarter of this year, profit doubled to $41.1 million while sales also doubled to $258.7 million.

``The company is on a trajectory that mirrors Microsoft, Oracle and Veritas in the early days,'' Jefferies & Co. analyst Katherine Egbert said today in a report. ``VMware has taken IT by storm.'' The San Francisco-based analyst rates the shares ``buy.''

Before VMware, 29 technology companies had raised a total of $3.79 billion on U.S. stock markets this year, compared with the $2.3 billion from 22 IPOs for all of last year, according to Bloomberg data. Interest in initial public offerings is holding steady even as shares worldwide tumble on concern that defaults in U.S. subprime mortgages and a credit crunch may trim economic growth and earnings.

Last month, Intel Corp., the world's biggest computer-chip maker, agreed to invest $218.5 million for a 2.5 percent stake in VMware. Cisco Systems Inc., the biggest maker of computer- networking equipment, will buy $150 million of VMware shares from EMC for a 1.6 percent holding. Both Cisco and Intel have partnerships with VMware.

Intel, Cisco

VMware counts all of the Fortune 100 companies and about 85 percent of the Fortune 1000 among its customers, according to regulatory filings.

``Most of those are still in the early stages of deployment,'' Chief Financial Officer Mark Peek said in an interview. ``We will be selling additional licenses to our existing customers.''

The company may face competition from Microsoft, which may give away a rival product for free, said Thomas Bittman, an analyst with Gartner Inc. in Stamford, Connecticut.

VMware needs to ``grab as much of the market share now, before Microsoft makes its move,'' he said.

VMware was co-founded in 1998 by Chief Executive Officer Diane Greene and her husband Mendel Rosenblum, who is chief scientist. The technology for VMware's products stems from research by Rosenblum at Stanford University, where he is an associate professor in the computer science department, according to VMware's Web site.

Proceeds from the sale will be used to repay $350 million in debt owed to EMC, according to a regulatory filing. Another $127 million will be used to purchase VMware's headquarters. The rest will go back into the business.

The sale was managed by Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Credit Suisse Group, Merrill Lynch & Co. and Deutsche Bank AG.

To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net;

Last Updated: August 14, 2007 17:19 EDT