Tech Stocks in Motion

Updated from 1:52 p.m.

Shares of Applied Signal Technology(APSG Quote) were among technology's losers Tuesday, falling 17.4% after the company posted second-quarter results that were well below Wall Street expectations.

The maker of digital signal processing equipment earned $2.3 million, or 20 cents a share, on sales of $32.1 million. Analysts surveyed by Thomson First Call were expecting earnings of 26 cents a share on sales of $40.3 million. A year ago the company earned $3.9 million, or 34 cents a share, on sales of $36.8 million. The company attributed the year-over-year sales decrease to fewer product sales and to a reduction in sales from its largest contract, which resulted from a stop work notice it received on a portion of the contract during fiscal 2004. Applied Signal blamed the earnings decline on a significantly higher tax rate in 2005. Shares traded down $3.47 to $16.50.

PalmSource(PSRC Quote) rose 12.9% after the software maker said palmOne(PLMO Quote) would pay it $30 million over the next three and a half years for the rights to the Palm brand name. As part of the deal, palmOne will change its name to Palm later this year. PalmSource, meanwhile, will retain rights to use the PalmSource name and related Palm trademarks for itself and its licensees over the next four years. At some point during the four years, though, PalmSource will adopt a new brand identity.

In addition to the sale of the brand name, PalmSource said that palmOne renewed its license of the Palm operating system. Under the terms of the deal, PalmSource will receive minimum royalty payments of $148.5 million, which includes $65 million from 2007 to 2009, assuming certain development milestones are reached. Shares of PalmSource traded up $1.15 to $10.04 while shares of palmOne traded up $1.58, or 5.8%, to $28.84.