SAN FRANCISCO (AP) -- The stocks of business software makers VMware Inc., Citrix Systems Inc. and BMC Software Inc. dropped Tuesday amid concerns about how their products will fare this year.
VMware absorbed the worst beating as its stock plummeted $21.18, or 21.5 percent, to close at $77.14. The steep decline came after VMware offered first-quarter revenue projections below the estimates among analysts surveyed by FactSet. The company, based in Palo Alto, Calif., underscored its anticipation of tougher times ahead by announcing plans to cut 700 jobs, or nearly 7 percent of its workforce.
The sell-off represented the largest one-day percentage decline in VMware's stock in more than four years. The company is a leader in the field of "virtualization" software that enables a single computer to operate as multiple machines, helping companies to save money on equipment and energy.
After reporting its fourth-quarter earnings late Monday, VMware predicted it would post revenue of $1.17 billion to $1.19 billion during the first three months of this year. Analysts had forecast revenue of $1.25 billion.
The downturn in VMware's fortunes raised worries that Citrix, another virtualization software specialist based in Fort Lauderdale, Fla., will also provide a sobering outlook Wednesday, when it is scheduled to report its latest quarterly earnings. Analysts, on average, expect Citrix to post adjusted earnings of $3.12 per share on revenue of $2.9 billion, according to FactSet.
Citrix fell $2.68, or 3.8 percent, to close at $68.73 on Tuesday.
Although he is worried that Citrix may lower its earnings forecast for 2013, Citi Research analyst Walter Pritchard believes the company is currently in better shape than VMware. In a Tuesday research note, he recommended buying Citrix stock, if it's hit hard by the market's worries about VMware.
BMC Software plunged $2.77, or 6.2 percent, to finish at $41.71, following an earnings letdown Monday after the market closed. BMC earned an adjusted 99 cents per share on revenue of $580 million during its fiscal third quarter ending in December. Analysts had projected adjusted earnings of $1.01 per share on revenue of $588 million, according to FactSet.
The company, based in Houston, compounded that disappointment with a quarterly outlook that was also below analysts' estimates.