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MARKET CLOSE: Blue chips, Microsoft turn sour

Investors pulled out of blue-chip stocks Monday as the Dow Jones industrial average fell 87 points to 11,025.85. The tech-laden Nasdaq composite shed 5 points to end at 4,958.52.

"It's probably a reaction to the upward movement we had in last couple of weeks - a little profit taking in some of the areas," said Alfred Kugel, senior investment strategist at Stein Roe & Farnham.

Microsoft (Nasdaq: MSFT), the most active stock on the Nasdaq, fell 7 5/8 to 104 1/16 after The Wall Street Journal reported it would allow computer makers to embed competitors' software in its Windows operating system. The move was an effort to settle federal antitrust charges against it. Speculation has it the software maker will have to compromise much more in order to reach an agreement.

Oracle Corp. (ORCL) shares added 1 7/16 to 88 7/16 and Sun Microsystems Inc. (SUNW) closed up 4 3/4 to 105.

Among widely held PC stocks, Dell Computer Corp. (DELL) rose 1 7/16 to 57 7/8; Compaq Computer Corp. (CPQ) added 7/16 to 29 3/16; Gateway Inc. (GTW) lost 7/16 to 55 13/16 and Apple Computer Inc. (AAPL) closed up 7/8 to 139 9/16.

Red Hat (Nasdaq: RHAT), which promotes Windows rival Linux, fell 3 7/8 to 56 5/8 after it reporting a fourth-quarter loss of 4 cents a share, squeaking by First Call's expected loss of 5 cents a share.

Spyglass (Nasdaq: SPYG) shot up 12 1/2, or 18 percent, to 82 3/8 after OpenTV Corp. (Nasdaq: OPTV) it would pay $122.28 a share for the Web. OpenTV shares plunged 39 32/32, or 24 percent, to 129 1/32.

Unisys (NYSE: UIS) gained 2 9/16 to 27 7/8 after the company refused comment on a report that Deutsche Telekom AG was seeking to buy it.

Yahoo! Inc. (YHOO) moved up 6 3/4 to 200 3/4 while America Online Inc. (AOL) and Inc. (AMZN) picked up 2 3/4 and 7/16 a share, respectively.

Rare Medium Group (Nasdaq: RRRR) jumped 8 1/16 to 58 1/16 after two brokerage firms said they had started research coverage of the stock.

Intel Corp. (INTC) pushed up 3 5/8 to 142 11/16 and Advanced Micro Devices Inc. (AMD) inched up 3/16 to 54 3/16.