VMware: dual core? - FT.com Are there second acts in American growth stories? VMware investors hope so. Last week the software company detailed its strategy to translate its dominance in server virtualisation - helping companies use their computing hardware efficiently - into other growing areas of corporate computing. Investors were impressed: the stock rose by a 10th after the presentation, taking back some of the 30 per cent it lost in January when the company gave a disappointing growth outlook. Revenue from new software licences, which grew at more than 30 per cent in 2011, was projected to expand at a mere high single-digit pace in 2013. VMware's bread and butter is server virtualisation software. The news that attracted the most attention last week was the creation of Pivotal, a joint venture with EMC, VMware's majority shareholder. The JV will house a hodgepodge of analytics and cloud applications with revenue of a few hundred million - less than a 10th of VMware's. But it could one day be listed or acquired at a premium price given the hype surrounding big data. Pivotal is therefore a call option on the future. For now, investors would be well served to pay attention to VMware's strategy for its core business. Its key points are applying software virtualisation outside of servers, to the other parts of the data centre - networking and storage - and offering a cloud infrastructure analogous to Amazon's. The size of these markets is expected to exceed $40bn by 2016, and VMware has forecast it will accelerate top-line growth above 15 per cent between 2014 and 2016, ahead of Wall Street expectations. VMware's Peg ratio (its price to earnings multiple divided by future earnings growth) is 1.3, a 25 per cent discount to the average of the past two years. But with future growth coming from unproved markets, that makes sense.