VMware, the software group, made an explosive debut as a public company yesterday as the stock surged more than 76 per cent at the open on the New York Stock Exchange, valuing the company at $20 billion (£10 billion) and recalling the heady days of the dot-com boom.

The shares closed at $51.17 after being priced at $29, at the top of an indicative range that was raised by 20 per cent last week. The initial public offering was the largest in the technology sector since Google’s float in 2004.

The surge appeared to vindicate the decision taken by EMC, the database group that bought VMware for $602 million in 2004, to forge ahead with the sale of 10 per cent of the group despite recent stock market turmoil.

It also made recent stakebuilding in VMware by Intel and Cisco appear increasingly good business. Intel, the chipmaker, last month paid $218.5 million, or $23 a share, for 2.5 per cent of VMware. EMC also sold six million shares to Cisco, the IT hardware maker, for $150 million, or $25 each.

VMware specialises in software which allows a single server – the hardware used to store digital data – to run several different operating systems. This cuts costs by slashing the number of servers a company needs.

The IPO will raise interest in other players in the sector, including SWsoft. The Bermuda-based group, founded by Serguei Beloussov, a Russian-born Singaporean, claims to be growing faster than VMware.

Analysts estimate that VMware accounts for about 85 per cent of the virtualisation market. It is thought that about 3 per cent of servers run virtualisation software, a figure forecast to grow tenfold in coming years.

After expenses, the IPO raised about $900 million for VMware.

VMware recently said that first-half sales had hit $555.5 million, nearly doubling from a year earlier. Profits more than doubled to $75.3 million.

However, VMware’s rapid growth has presented pitfalls for the company’s management. In its IPO filings, VMware said that independent auditors had found “material weakness” in its internal controls, giving warning that the problems could result in a misstatement of its financial results.

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