VMware announced on Tuesday the abrupt departure of founder and CEO Diane Greene, replacing her with former Microsoft executive Paul Maritz.
The virtualization software also warned that full-year revenue will be "modestly below the previous guidance of 50 percent growth over 2007." The company did not update its guidance for the just-ended quarter, saying it will report results as scheduled on July 22.
VMware shares plummeted on the news, changing hands recently at $39.50, down $13.69 or more than 25 percent.
The company's revenue warning is the second recent financial hiccup for VMware, which also reported disappointing earnings in January.
Maritz, who spent 14 years at Microsoft, had been at former VMware parent EMC since February, when the storage giant bought Maritz's start-up, Pi.
Although VMWare issued a nice statement praising Greene for her contributions, the company made it clear that the decision for Greene to leave was made by the board.
"VMware's Board of Directors announced today that it has made a change in the leadership of the company with the departure of Diane Greene as president and CEO," the company said.
The move comes as VMware faces stepped-up competition in the virtualization field it has dominated, including from Maritz's former employer, Microsoft.
VMware's fortunes have shifted drastically since the company launched a wildly successful IPO last summer. The company's stock rose from an initial price of $29 per share to a high of $55.50 in its first day of trading.
EMC purchased VMware for approximately $635 million in 2003.