UPDATE 2-VMware says another executive is stepping down

(Adds comments from the company, background.)

BOSTON, Sept 19 (Reuters) - VMware Inc VMW.N said on Friday a senior executive in charge of product development at the software maker, is leaving, the latest in a recent string of executive departures there.

Spokeswoman Mary Ann Gallo said that Vice President of Product Development Paul Chan resigned in August, after seven years with the company, and will leave on Oct. 3.

VMware’s stock price, one of last year’s top tech performers, has lost about two-thirds in value this year as two of its founders and its top executive in charge of research and development have left the company.

Analysts have said investors are concerned that more key employees will leave in the wake of the executive departures.

“We’re obviously sorry to see Paul go, but turnover is inevitable at any company. VMware is putting initiatives in place to retain key employees,” Gallo said.

On Sept. 9, the company announced the resignation of its chief scientist, Mendel Rosenblum. A co-founder of the company, he is also the husband of co-founder Diane Greene, who was replaced as chief executive in July.

On Sept. 2 VMware disclosed that its top executive for product development, Executive Vice President for Research and Development Richard Sarwal, had left less than a year after being recruited away from Oracle Corp ORCL.O.

Palo Alto, California-based VMware, whose virtualization software helps businesses boost the efficiency of server computers and cut energy costs, is majority owned by EMC Corp EMC.N.

VMware shares rose $2.36 to $30.12 in Nasdaq trade on Friday as technology stocks rallied. They hit a record high of $125.25 in October of last year.

One key issue that has hurt VMware's stock price in recent months is worries about mounting competition from Microsoft Corp MSFT.O, which recently introduced rival software to VMware's top-selling product. Investors are also concerned that customers will reduce spending on virtualization software as economy weakens and they cut corporate technology budgets.

Gallo could not immediately say why Chan is leaving or who will replace him.

Chan could not be reached. (Reporting by Jim Finkle; Editing by Brian Moss and Gunna Dickson)