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MARKET CLOSE: Microsoft leads tech sell-off

Investors unloaded technology stocks Monday, sending Nasdaq composite down 161 points to 3,482.38 after Microsoft became the latest sector leader to spook Wall Street. The Dow Jones industrial average closed up 62 points to 10.906.10.

Monday's pullback eroded the gains technology stocks made early last week as investors continue to fret over pricey valuations and slowing revenue growth.

"It's healthy because it brings valuations down to the point where you can come in with new money," said Larry Rice, chief investment officer at Josephthal Lyon & Ross. "Plus, it renews the focus on real companies that can't get the kind of press they deserve -- companies that have been blowing out their earnings numbers. Real companies with real sales and earnings."

Microsoft (Nasdaq: MSFT) shares plunged 12 5/16 to 66 5/8. Although antitrust concerns were a factor, Microsoft's gloomy outlook was the major reason investors were skittish. The company reported lower than expected third quarter sales and a host of analysts downgraded the stock.

Oracle Corp. (ORCL) finished up 1 5/8 to 72 7/16 while Sun Microsystems Inc. (SUNW) fell 1/8 to 87 5/8.

Among widely held PC stocks, Dell Computer Corp. (DELL) lost 2 3/16 to 47 3/4; Compaq Computer Corp. (CPQ) shed 1 3/8 to 26 1/16; Gateway Inc. (GTW) fell 1 13/16 to 53 1/16 and Apple Computer Inc. (AAPL) closed up 1 1/2 to 120 3/8.

Pervasive Software (Nasdaq: PVSW) tumbled 3 11/16 to 7 1/4 after the company missed estimates in its fiscal third quarter.

NetZero (Nasdaq: NZRO) shot up 3 5/32 to 11 7/16 after Qualcomm Inc. (Nasdaq: QCOM) invested $144 million in free access provider for a 10 percent stake. Qualcomm closed off 9 9/16 to 99 15/16. (Nasdaq: PCLN) dropped 6 1/8 to 61 3/4 after the company topped Wall Street estimates Monday with a first quarter loss of $7.3 million, or 4 cents per share, on sales of $313.8 million.

Yahoo! Inc. (YHOO) closed off 9 1/4 to 113 7/8 while America Online Inc. (AOL) and Inc. (AMZN) ended off 2 1/4 and 2 9/16 a share, respectively.

Exodus Communications (Nasdaq: EXDS) slid 25 3/16 to 82 1/2 after the company topped estimates but didn't impress with revenue growth. Revenue was roughly in line with expectations.

Intel Corp. (INTC) moved up 3/4 to 116 1/18 while Advanced Micro Devices Inc. (AMD) and IBM Corp. (IBM) closed up 1 3/8 and 2 a share, respectively.