The company's stock took a hit after Goldman Sachs trimmed Microsoft's third-quarter revenue outlook to $5.75 billion from $5.95 billion, citing slowing demand for personal computers.
At the 1 p.m. PT close of regular trading, Microsoft fell $4.50, or 5.4 percent, to $79.38. Microsoft shares are trading well off a high of $120, which it hit amid speculation that the company would settle its landmark antitrust case. Yet the stock has tumbled more than 23 percent since March 31 and after U.S. District Judge Thomas Penfield Jackson ruled that Microsoft violated antitrust law by abusing its market position for PC operating systems.
Goldman Sachs analyst Richard Sherlund did keep Microsoft on the investment bank's "recommended list," and he did not change the company's outlook for earnings per share.
The revenue prognosis comes at a sensitive time for the market--particularly for technology issues, whose recent downward spiral coincided with last week's ruling in the Microsoft case.
The Nasdaq plummeted 286.29 points, or more than 7 percent, to 3,769.61. The Dow Jones industrial average also declined, falling 161.95 to 11,125.13.
Personal computer maker Dell Computer slid $4.06, or 7 percent, to $51.38. Gateway shed $2.41, or 4 percent, to $55.13. Compaq Computer fell slightly, down 81 cents to $26.19.
Shares of Cisco Systems shed $5, or 7 percent, to $65, and Sun Microsystems dropped $7.88, or 9 percent, to $80.