Updated from 1:16 p.m. EDT

Shares of

Red Hat

(RHAT)

fell Tuesday after the Linux software vendor's CFO unexpectedly resigned and despite the company's upside preannouncement.

Kevin Thompson is leaving to spend more time with his family, the company said Monday night. Shares of Red Hat traded down $2.24, or 9.2%, to $22.06 on volume of 38.2 million shares. An effort to calm investor fears by previewing second-quarter earnings failed to stem the selling. Red Hat put quarterly net income at 5 cents a share, a penny better than expectations.

Computer maker

Gateway

(GTW)

moved higher after the company said it expects to report better-than-expected sales in the second quarter. Citing strength in its retail and professional lines, the computer retailer put quarterly revenue at $860 million to $880 million, up from previous guidance of $798 million. Gateway expects to lose between 13 cents and 14 cents a share before a charge in the quarter, roughly in line with estimates. Shares of Gateway traded up 83 cents, or 22.6%, to $4.50 on volume of 13.3 million shares.

Sonic Innovations

(SNCI)

fell by as much as 40% Tuesday after the maker of digital hearing aids said that it would report weaker-than-expected second-quarter results. The company said changes in the German health care system would significantly reduce sales and lead to quarterly earnings of 2 cents to 4 cents a share, about half of what was expected. Shares of Sonic Innovations traded down $3.51, or 38.3%, to $5.66 on volume of 5.9 million shares.

In addition to Red Hat and Sonic Innovations,

Nasdaq

volume leaders included

Microsoft

(MSFT) - Get Report

, up 51 cents to $27.41;

Cisco

(CSCO) - Get Report

, up 33 cents to $23.64;

Oracle

(ORCL) - Get Report

, up 17 cents to $11.71; and

Intel

(INTC) - Get Report

, up 44 cents to $28.43.

In addition to Gateway,

NYSE

volume leaders included

Lucent

(LU)

, up 9 cents to $3.50;

Motorola

(MOT)

, down 50 cents to $18.45;

Nortel

(NT)

, up 14 cents to $4.04; and

General Electric

(GE) - Get Report

, up 24 cents to $31.81.

Among notable NYSE price movers,

Sabre Holdings

(TSG) - Get Report

rallied after the online travel company raised its second-quarter earnings outlook. Earnings are now expected to be significantly better than its previous estimate of 35 cents to 40 cents a share.

Revenue, meanwhile, is expected to be $540 million to $560 million, in line with previous guidance. Sabre attributed the stronger outlook to better-than-expected profitability at its Travelocity unit. Analysts had been expecting the company to report earnings of 37 cents a share on sales of $546.7 million. Shares of Sabre Holdings traded up $2.65, or 10.5%, to $27.97.

Shares of

Commscope

(CTV) - Get Report

rose $1.68, or 9.7%, to $18.96 after the company said that it restructured its relationship with Tokyo-based Furukawa Electric. Commscope transferred all of its equity ownership in OFS Brightwave to Furukawa in exchange for 7.66 million shares of Commscope stock owned by Furukawa. Additionally, Commscope and Furukawa announced a renewed optical fiber contract that runs through June 2008.

Apparel maker

Quicksilver

(ZQK)

rose $1.49, or 6.7%, to $23.85 after the company reported better-than-expected second-quarter financial results and raised guidance for its third and fourth quarters. During the second quarter, it earned 47 cents a share on sales of $322.6 million. Analysts were looking for 46 cents a share on sales of $297.7 million.

Looking ahead, Quicksilver expects to earn 28 cents to 29 cents a share during the third quarter on sales of $300 million to $305 million. Analysts were looking for 28 cents a share on sales of $286.5 million. For the full year, it expects to earn $1.27 to $1.29 a share on sales of $1.19 billion to $1.2 billion. Analysts were expecting earnings of $1.25 a share on sales of $1.14 billion.

Shares of

Advo

(AD)

fell $1.84, or 5.5%, to $31.50 after the company announced the resignation of its CEO. Advo said that CEO Gary Mulloy was leaving the company to pursue other interests.

Brilliance China Automotive

(CBA)

fell after car sales data in China showed a 19.4% drop in May from April. Efforts to cool China's white-hot economy seem to be taking effect, resulting in fewer car buyers who were previously able to acquire cheap financing. Shares of Brilliance China Automotive traded down 98 cents, or 3%, to $31.25.

On the Nasdaq, shares of

JPS Industries

(JPST) - Get Report

soared 83 cents, or 33.1%, to $3.34 after the company reported second-quarter earnings of 9 cents a share on sales of $38.2 million. A year ago, the company reported a loss of 17 cents a share on sales of $29.5 million.

Looking ahead, JPS said that it expects its recent trend of quarterly improvements to continue, but it cannot give specific guidance. Separately, the company announced a new $25 million credit facility with Wachovia that runs through April 2007.

Shares of

First Washington Financial Corp

(FWFC)

rose $5.83, or 28.1%, to $26.58 after the bank agreed to be acquired for $124.4 million in stock. Shareholders of First Washington will receive 1.35 shares of

Fulton Financial

(FULT) - Get Report

for each share they own. Fulton shares rose 15 cents, or 0.8%, to $19.96.

In addition, First Washington will declare and pay an 11-cent dividend during the third and fourth quarters of 2004, provided that the transaction has not closed prior to Fulton's scheduled dividend payment during those periods.

eCollege.com

(ECLG)

rose 33 cents, or 2.3%, to $14.96 after the company announced it would be collaborating with Microsoft and

Hewlett-Packard

(HPQ) - Get Report

to provide a content management system designed to support eLearning programs online and on campus. eCollege's Content Manager is expected to be implemented by the end of 2004 and ready for use during the 2005 spring term.

Shares of

Medquist

(MEDQE)

slumped $1.11, or 8.7%, to $11.70 after the company said it received a delisting notification from Nasdaq, effective June 16. The company anticipates its shares being quoted on the pink sheets. The delisting is the result of the company's failure to file its quarterly

Security and Exchange Commission

filings in a timely manner. Medquist's outside auditors are currently working with the company's outside counsel to complete an internal investigation of the company's billing practices.

Lowrance Electronics

(LEIX)

fell $2.74, or 7.8%, to $32.26 after it said it would restate financial results for 2003 and the first three fiscal quarters of 2004. The earnings restatement is the result of the company changing its variable accounting method for stock options.

The impact of the accounting change will reduce 2003 earnings to $1.19 a share from the $1.27 a share the company previously reported. For the first three quarters of 2004, earnings will be $1.46 a share vs. the previously reported $1.70 a share. Looking ahead, the company says that it will adopt fair value accounting for its stock options, which will increase restated earnings during the first three quarters of 2004 to $1.69.

Shares of

Herley Industries

(HRLY)

fell $1.15, or 5.6%, to $19.50 after the company reported weaker-than-expected third-quarter earnings. Earnings of 26 cents a share fell short of the 27 cents analysts were expecting. Sales of $30.2 million were in line with estimates.