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MARKET CLOSE: Microsoft sell-off drags techs even lower

Microsoft’s profit warning had a predictable effect on the stock market Friday as the Nasdaq composite shaved off 74 points to 2,654.42 while the Dow tumbled 239 points to close at 10,435.72.

After three months of unprecedented warnings from the pillars of the technology industry, investors are wondering if there are any companies out there who aren’t hurting from this slowdown.

“You get a significant hiccup in the ultimate grand-daddy of tech stocks, and you do expect a sell-off,” said Charles Lemonides, chief investment officer at M&R Capital Management. “We're taking the speculative air out of a bubble.”

Microsoft (Nasdaq: MSFT) shares plunged $6.31 to $49.19 after the company issued a profit warning amid a slowdown in the PC sector.

Major PC vendors, chipmakers and software firms have all lowered estimates in the past few weeks, compelling investors to sell their positions.

Any hopes of a Santa Claus rally have all but evaporated with just two weeks left in the quarter and the year.

“There's no way to really candy-coat this,” said William Epifanio, an analyst at JP Morgan. “The weakness that we were seeing in the consumer PC business has spread into the corporate sector.”

Oracle (Nasdaq: ORCL) managed to pick up $1.38 to $28.88 after topping analyst estimates for its second quarter and receiving positive reviews from analysts.

But it was virtually the only tech stock to gain ground Friday.

Sun Microsystems (Nasdaq: SUNW) lost $1.25 to $30.44 and EMC (NYSE: EMC) fell $6.50 to $68.13 after Bear Stearns lowered its ratings on both stocks Friday citing "concerns about spreading economic weakness," though the companies themselves haven't indicated any trouble ahead.

Such is the way it goes in a down, dare we say, bear market.

CMGI (Nasdaq: CMGI) trimmed 78 cents to $8.28 following its first quarter report. While most investment firms reiterated ratings on the stock, analysts questioned CMGI's ability to deliver on its promise for profitability by the end of the fiscal year without significant restructuring.

Yahoo! (YHOO) gained $1.25 to $33.25 while (AMZN) and eBay (EBAY) gained 19 cents and $1 a share, respectively. America Online (AOL) lost $1.04 to $48.96.

More warnings came Friday from Artesyn Technologies, Inc. (Nasdaq:ATSN), which saw its shares drop $9.14 to $15.50 on the news that it will fall short of estimates in its fourth quarter.

Among widely held PC stocks, Dell (DELL) clipped 6 cents to $19.88; Compaq Computer (CPQ) fell $1.35 to $17.35; Gateway (GTW) lopped off 15 cents to $18.64 and Apple (AAPL) closed off 38 cents to $14.06.

Cisco Systems (CSCO) fell $2.77 to $48.17. Nortel Networks (NT) edged up 19 cents to $38.94 and Lucent Technologies (LU) closed off 88 cents to $17.81.

Intel (INTC) dumped $2.75 to $32.38 while Advanced Micro Devices (AMD) and IBM (IBM) closed off 31 cents and $4.63 a share, respectively.