JPMorgan (NYSE:JPM) Weighs in on VMWare (NYSE:VMW) Margin Guidance

Concerns over the weak margin guidance from VMWare (NYSE:VMW) spooked investors today, putting downward pressure on the tech sector, and pushing the share price of VMWare down over 3 percent.

While VMWare had a good quarter, that was largely ignored on the margin guidance.

JPMorgan analyst John DiFucci said in a note to clients, “The significant fourth-quarter upside did not provide the economies of scale that we might have expected, and guidance for 2011 was for flat margins, as the company invests to capitalize on the opportunities before it.

“It’s difficult for us to ascertain whether this is the best path, other than to acknowledge the opportunity, but to also question whether margins should really be flat next year if revenue grows 21% to 24%.”

VMWare was trading at $84.92, falling $2.81, or 3.20 percent, as of 12:33 PM EST.