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Tech shares follow Microsoft lower

A sharp decline in Microsoft shares pulls the Nasdaq composite index lower, while the Dow Jones industrial average gains ground.

A sharp decline in Microsoft shares pulled the Nasdaq composite index lower today, while the Dow Jones industrial average gained ground.

The Nasdaq fell 161.35 to close at 3,482.53, and the Standard & Poor's 500 index dropped 4.68 to 1,429.86. The Dow gained 62.05 to 10,906.10, led by McDonald's and 3M.

The Philadelphia semiconductor index fell 30.64 to 993.64, led by chipmaker Lattice Semiconductor, which lost $5.88 to $57.06.

Dow component and tech bellwether Intel rose 75 cents to $116.13. Microsoft, also one of the 30 stocks that constitute the Dow, dived $12.31, or nearly 16 percent, to $66.63. Nearly 157 million shares changed hands, more than three times Microsoft's daily average, making it the most active Nasdaq stock.

Some analysts cut their ratings on the software giant after the company said last week that its revenue will lag expectations.

Microsoft wasn't the only software company to take a hit today: Mercator Software was the Nasdaq Stock Market's largest loser, falling $24.25, or nearly 38 percent, to $40.25.

The CNET tech index lost 99.68 to 2,826.55, dragged down by shares of Microsoft and Exodus Communications. Losers edged out winners, with 84 of the 99 stocks in the index falling and 15 rising.

Of the 18 sectors tracked, PC software and Internet services companies posted the sharpest drops, falling about 13 percent and about 10 percent, respectively. Distribution companies were the day's largest gainers, climbing a slim 0.1 percent.

Among members of the CNET tech index, Exodus posted disappointing earnings and fell $25.19, or 25 percent, to $82.50.

On the positive side, Oracle rose $1.63 to $72.44, and IBM gained $2 to $106. Phone companies Bell Atlantic, BellSouth, GTE and SBC Communications finished higher.

Shares of Internet service provider NetZero jumped $3.16, or 38 percent, to $11.44. Qualcomm said it will invest $144 million in the company for a 10 percent stake. Qualcomm fell $9.88, or 9 percent, to $99.63.

PC shipments slumped during the first quarter because of a slowdown in corporate spending, according to some research firms. But a worldwide economic recovery, continued consumer demand and other factors indicate that the industry should continue to grow.