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Earnings jitters send tech shares lower

Federal Reserve Chairman Alan Greenspan remains mum on interest rates, while warnings about earnings pound some tech shares.

An early morning speech by Federal Reserve Chairman Alan Greenspan sent the markets into positive territory, but technology stocks later slid on earnings and merger concerns.

"Some funds are doing some portfolio shifting before earnings news starts coming out," said Tony Cecin, head of trading at U.S. Bancorp Piper Jaffray.

"The second half of the year is going to be more of a market of stocks than a market of sectors," he said, adding that investors need to carefully pick their stocks because the days of riding a sector higher by just buying indiscriminately are numbered.

The Nasdaq composite index fell 23.87 to 3,956.42, and Standard & Poor's 500 index rose 5.26 to 1,480.88.

The Dow Jones industrial average rose 80.61 to close at 10,727.19, led by International Paper, which rose $3 to $35.25.

At the end of regular trading, Intel was up $1 at $138.81; Microsoft fell 31 cents to $79.13.

The CNET tech index lost 25.93 to close at 2,777.30. Losers edged out winners, with 64 of the 94 stocks in the index falling, 29 rising and one remaining unchanged.

Of the 18 sectors tracked, Internet e-tailers and Internet content companies posted the sharpest drops, falling 5 percent and nearly 4 percent, respectively. Computer service providers were the day's largest gainers, climbing 1 percent.

"The Internet sector was weak again today," said Cecin. Yahoo fell $4.50 to $105.50 on a volume of 28 million shares, more than three times the stock's average.

Yahoo reported earnings of 12 cents a share, beating the First Call average of analyst estimates of 10 cents per share. That compares with earnings of 5 cents a share for the same period a year ago. The Internet portal also generated $270 million in revenue compared with the $128.5 million last year. The shares climbed to nearly $114 in after-hours trading.

"Everyone is looking at Yahoo for some conviction in the Internet sector," said Bryan Piskorowski, a market analyst at Prudential.

Optical equipment maker JDS Uniphase was the most active stock on the Nasdaq. The shares fell $5.44 to $95.69 as volume exceeded 40 million shares, more than twice the stock's average daily volume.

The stock has fallen almost 18 percent since the company announced its $41 billion merger with SDL. Piskorowski said investors fear "earnings dilution" from the deal. JDS might run into some regulatory problems, he said, and JDS has now "paid up" for the merger." SDL shares fell $2.69 to $318.

Pinnacle Systems was the percentage loss leader on the Nasdaq, falling $13.44, or 59 percent, to $9.19 on volume of 23.8 million shares, about 34 times the stock's daily average of approximately 700,000 shares.

The maker of software and equipment for video editing said it expects earnings of 6 to 8 cents a share, excluding acquisition-related and one-time charges for the four quarter ending June 30.

Wall Street predicted the company would earn 16 cents a share, the consensus estimate of five analysts surveyed by First Call. Pinnacle earned 13 cents in the year-ago quarter.

Aspect fell $23.88, or 54 percent, to $20 on volume of 20 million shares, more than 33 times the stock's average daily volume of about 612,000 shares.

Aspect, a maker of software that helps businesses manage relationships with customers, announced yesterday that it expects pro forma earnings for the second quarter of 1 to 3 cents a share, including a gain of 6 cents from the sale of some equities during the quarter.

Wall Street predicted the company would earn 8 cents a share, the consensus estimate of five analysts surveyed by First Call.

Among members of the CNET tech index, Double Click fell $3.19, or 10 percent, to $28.50 on concerns that lower spending on Internet advertisements might hurt the company's bottom line.

Shares of web portal Lycos also fell $4.88, or 10 percent, to $41.63 on similar concerns, while PeopleSoft rose $2.16, or 11 percent, to $21.72.

The Philadelphia semiconductor index fell 30.76, or nearly 3 percent, to 1,122.05, led by chip designer Rambus, which lost $10, or 10 percent, to close at $87.25.

Dell Computer chief executive Michael Dell sold 6.25 million shares of the No. 1 direct-seller of personal computers last month, raising $308.9 million. Dell shares closed up $1 at $50.75.