Goldman Sachs analyst said Wednesday, Web-based software provider to sell Saleforce shares and VMware Inc to buy as the companies faces slowing IT spending.

Web-based software provider Salesfore was cut to a ‘sell’ rating today as outlook remains negative, while VMware was raised to a ‘buy.’

Analyst David Bailey of Goldman Sachs lifted VMware from ‘Neutral’ projecting revenues growth of 9 percent for this year as its virtualization technology consistently ranks as one of the highest priorities of CIOs

“This out-sized growth relative to most of tech should lead to renewed investor interest and out performance in VMware shares,” he wrote. Bailey set his a price target to $29 from $27 for the company.

VMW shares jumped $2.58, or 10.92 percent, to $26.20.

Separately, analyst Sarah Friar moved Salesforce to the Conviction Sell list, sending shares down drop 27 cents or 0.82 percent to $32.46 at the earlier trading.

Ongoing negative data points on application spending are likely to weigh on the shares,” Friar said.

“We believe estimates remain at risk with the company facing headwinds on the top-line from slowing IT spend and on the bottom-line from the need to invest in marketing for lead generation at a diminishing return,” she wrote.

She also expects booking growth at about 20 percent year-over-year in each of the next four quarters to meet Wall Street expectations for 2010 and cash flow growth to slow to about 10 percent in fiscal 2010 from 26 percent in fiscal 2009.

Salesforce Investment Goldman sachs