The harder you party, the longer the hangover.

Like many of the companies it had invested in, Firsthand Funds has watched its own investors lose faith, prompting it to initiate a round of layoffs last Friday.

Assets in the

(TVFQX)

Firsthand Technology Value fund, once among the most high-profile of the category, have declined from some $2.5 billion at their peak to $948 million today, forcing the firm to retrench for the second time.

Friday's layoffs, which included three research analysts, brings the firms total head count to 33 people, including three analysts. Firsthand first reduced its workforce on Sept. 24, 2001, when it let go 15 of its 65 workers, including two analysts.

"We thought we were out of the woods in terms of staff, but in this business nobody knows, nobody can predict," says Steven Witt, a spokesman for the firm. "And our business decisions often depend on our assets."

The Tech Value fund, which was down 51% year-to-date as of Friday, holds some pretty big stakes in companies that have seen some pretty big losses. Nine of its top 10 holdings are down. Four of those,

Wind River Systems

(WIND)

,

PerkinElmer

(PKI) - Get Report

,

Legato Systems

(LGTO)

and

DMC Stratex Networks

(STXN)

, are down more than 70%.

The fund's top holding,

PeopleSoft

(PSFT)

, which makes up 6.54% of the fund, is down 62.6% as of Friday. The fund's top 10 holdings make up 42.2% of its total assets.

The one bright spot is defense contractor

Raytheon

(RTN) - Get Report

, which has returned 18% for the year to date. Raytheon, which manager Kevin Landis picked up after Sept. 11, makes up 4.5% of the Tech Value fund. Landis also picked up other companies that sell tech-related services to the U.S. government, including semiconductor firm

Aeroflex

(ARXX)

.

Despite the fund's recent abysmal performance, Morningstar analyst Laura Pavlenko Lutton is willing to give it the benefit of the doubt. "It's been a difficult market for Firsthand's aggressive investment style, but they've stuck to their guns and haven't gone into more conservative investments -- like media stocks -- which other technology funds have done," she says. "The fund certainly isn't for everyone. But when technology starts to come back, this fund will begin to do well again."

Typically you would look to a fund's long-term record to judge it's long-term viability, Lutton says, but Tech Value's recent performance has been so dreadful that it has dramatically dragged down the long-term averages.

"But Kevin Landis is a seasoned manager in this space," she says. "He didn't just start managing a tech fund in 1999 like a lot of them did." Landis has managed the fund since its inception in 1994.

Other funds in the Firsthand family haven't fared all that well of late, either. Its

(TIFQX)

Technology Innovators fund is down 54% year to date.

(TLFQX)

Technology Leaders has fallen 36% since the start of the year, and

(GTFQX)

Global Technology is down 40% year to date.