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Wachovia’s Philip Rueppel this morning was the latest analyst to take a machete to his EPS estimates for the software sector, reducing numbers for most of the companies he follows.

“We are reducing estimats for a majority of companies in our universe, as we believe typical Q4 budget-flush will be muted this year, and growth prospects for new licenses next year will be muted,” he writes.

As part of his call, Rueppel downgrades his ratings on VMware (VMW) to Market Perform from Outperform, asserting that the company has “particularly acute issues due to their customer base segmentation, and/or growth expectations.”

In today’s trading VMware is down 67 cents, or 3%, to $21.90.