Updated from 1:52 p.m.

Shares of

Applied Signal Technology

( APSG) 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) rose 12.9% after the software maker said

palmOne

(PLMO)

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.

Shares of

JDS Uniphase

(JDSU)

rose 5.8% after the company said it would acquire privately held Acterna for $450 million in cash and $310 million in stock. The deal, which is expected to close during the quarter ending Sept. 30, 2005, will immediately be accretive to JDS Uniphase's results. For the fiscal year ended March 2005, Acterna's sales exceeded $440 million and pro forma gross margins exceeded 50%. With the acquisition, JDS Uniphase will be the biggest provider of optical communications subsystems and broadband test and management systems. Shares traded up 9 cents to $1.64.

Talk America

(TALK)

rose 6.2% after the company lifted its 2005 financial guidance and announced the acquisition of

LDMI Telecommunications

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. Talk America will pay $24 million in cash and issue 1.8 million shares - valued at about $16 million based on closing prices as of May 20 - in connection with the acquisition. The companies expect the transaction to close during the third quarter. Looking ahead, Talk America said that it now expects 2005 sales of $385 million to $395 million, up from previous guidance of $380 million to $390 million. The revision excludes the LDMI acquisition. Earnings before interest, taxes, depreciation and amortization are now expected to be between $78 million to $82 million, up from previous guidance of $73 million to $77 million. Including the LDMI acquisition, total sales are expected to be between $430 million and $440 million; EBITDA is expected to be between $83 million to $87 million. Excluding the acquisition, analysts are expecting 2005 earnings of 83 cents a share on sales of $393.4 million. Shares traded up 53 cents to $9.15.

Shares of

Open Solutions

(OPEN)

fell 10.9% after the company revised the value of a new contract and lowered its previously issued first-quarter internal sales growth. Open Solutions said internal sales growth should have been 12% instead of the 19% that it originally reported. New signed contract value was $22.4 million instead of the previously reported $22 million. The company said the corrections have no impact on its first-quarter results or its second-quarter and full-year outlook. Shares traded down $2.18 to $17.82.

Other technology movers included

Cisco Systems

(CSCO) - Get Report

, up 45 cents to $20;

Intel

(INTC) - Get Report

, up 46 cents to $26.96;

Microsoft

(MSFT) - Get Report

, down 10 cents to $25.75;

Oracle

(ORCL) - Get Report

, up 10 cents to $12.80; and

Lucent Technologies

( LU), down 4 cents to $2.85.