Updated from 6:54 p.m. EST

Despite reporting better-than-expected earnings, shares of

Palm

(PALM)

-- a maker of handheld electronic organizers -- fell 16.1% to $32 on

Instinet

and 14.1% to $32.75 on

Island

ECN tonight.

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After the closing bell, Palm reported earnings of 5 cents a share, topping the

First Call/Thomson Financial

estimate by a penny. The company earned 2 cents a share in the year-ago period. Revenue rose to $522.2 million from $258.6 million a year ago. Again, that figure is higher than the consensus estimates of $519.7 million in revenue.

Separately, Palm announced that it will buy

WeSync

, which makes software that synchronizes calendars and contact lists for Palm and other handheld devices, for between $40 million to $45 million.

Palm was not the only maker of handheld devices with good news to be punished on the after-hours market.

Research in Motion

(RIMM)

-- a manufacturer of mobile communications hardware and software -- beat expectations, but lost 3.4% to $72.48, on Instinet and 4.7% to $71.50 on Island.

Research in Motion announced a profit of 2 cents a share, compared to 5 cents a share in the same quarter last year. Wall Street analysts had expected the company to lose a penny a share.

As if Wall Street did not already have enough to worry about -- the

Nasdaq Composite Index hit its lowest level today since March 23, 1999 -- more companies warned about their upcoming quarters after the market closed.

Beleaguered telecommunications company

AT&T

(T) - Get Report

updated guidance for its fourth quarter, sending its shares down 7.9% to $17.44 on Instinet.

AT&T lowered its fourth-quarter revenue and said its earnings would be lower than previously expected, saying changes in the anticipated signing of certain large network management contracts and an industry-wide slowdown are hurting its operations.

The company expects overall revenue to grow 2.5% to 3% in the fourth quarter, down from previous guidance of 4% to 5%.

AT&T also projected fourth-quarter operating earnings of 26 cents to 28 cents a share, compared with the 29 cents to 33 cents the company previously expected. According to First Call, analysts expect the company to earn 31 cents a share in the period.

Internet media company

RealNetworks

(RNWK) - Get Report

warned that its revenue and earnings for the fourth quarter will fall short of expectations, due to a weak market for spending in the dot-com space.

Shares of RealNetworks decreased 37.1% to $6.25 on Instinet and declined 36.5% to $6.31 on Island.

The Internet company said that it expects fourth-quarter earnings of around 2 cents, compared to Wall Street's expectations of 4 cents. The company expects to report revenue of $58 million to $60 million.

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