Goldman Sachs lowered its price target on software behemoth Microsoft ( MSFT) Thursday, citing a decline in the Nasdaq.

In a half-page note that he said was meant to clarify and revise price targets on software companies, Goldman Sachs analyst Rick Sherlund lowered his price target on Microsoft to $60 from $70, a 14% reduction.

He also dropped price targets on Oracle ( ORCL) and Siebel Systems ( SEBL) because Goldman is no longer setting price targets on stocks not on its recommend list.

Sherlund has a market outperform rating on Oracle and a market perform rating on Siebel, while Microsoft is on his recommend list. His firm has done banking business with Microsoft and Siebel.

Shares of Microsoft rose $1.50, or 3%, to $50.88 in recent trading. Oracle shares were up 13 cents, or 1.3%, to $10.94, and Siebel was up 28 cents, or 3.2%, to $8.91 in recent trading.

In his note, Sherlund said that since he published his $70 price target in April, the Nasdaq has dropped 23.3%. Since April 1, shares of Microsoft have sunk nearly $10 or 15.7%.

Sherlund said his new $60 price target represents 20% appreciation potential over the next 12 months and is consistent with his discounted-cash flow analysis.

Sherlund also noted that the new price represents a price-earnings ratio of 28.6 based on fiscal year 2004 earnings estimates, two points higher than the current P/E based on fiscal year 2003 estimates.

Sherlund cited a handful of risks to Microsoft achieving the price target, including the health of IT spending, the pace of PC unit growth, overall equity market volatility, litigation, the cost of start-up businesses such as the Xbox line and dependence on key management personnel.

Sherlund's reduced price target comes two days after Hewlett-Packard ( HPQ) reported disappointing back-to-school shipments and a decline in third-quarter PC sales .