Updated from 12:05 p.m. EDT

Saflink ( SFLK) was among the best-performing technology stocks Wednesday after the biometric security software company said it would team up with Microsoft ( MSFT) to develop software for the U.S. Department of Homeland Security.

The two companies will develop enterprise solutions geared toward border control and identity management projects based on Microsoft's enterprise software. These efforts are expected to help the Homeland Security office increase security and operational efficiency, while also reducing costs. Shares of Saflink traded up 78 cents, or 28.8%, to $3.49.

Secure Computing ( SCUR) fell after warning that second-quarter earnings and sales would fall short of expectations. Citing weakness in its federal government business, it now expects to earn 5 cents to 6 cents a share on sales of $21.7 million to $22 million. Analysts polled by Thomson First Call had expected 9 cents a share on sales of $23.7 million. Secure Computing is scheduled to report earnings July 20. Its shares traded down $3.60, or 36.3%, to $6.33.

Shares of FileNet ( FILE) slumped after the software company warned that second-quarter earnings and sales won't meet forecasts. FileNet said missed opportunities during the quarter led to the disappointing expectations. It now expects to report a profit of 3 cents to 5 cents a share on sales of $93 million to $95 million. Analysts had expected it to earn 12 cents a share on sales of $100.1 million. FileNet's shares traded down $4.89, or 17.5%, to $23.04.

NetEase.com ( NTES) fell after the China-based Internet company warned that second-quarter sales would fall well short of expectations. Citing a 37% to 41% sequential sales decline in its wireless value-added and other fee-based premium services, it now expects to report sales of $23.4 million to $23.8 million. Analysts had expected it to report sales of $24.7 million during the second quarter. Shares of NetEase.com traded down $4.43, or 11.8%, to $33.28.

Joining the list of earnings casualties, Ascential Software ( ASCL) fell after it warned that second- and third-quarter financial results would fall below expectations. The company blamed the shortfall on cautious spending by customers in the enterprise market. As a result, it now expects to report pro forma earnings of 4 cents to 5 cents a share on sales of $63.5 million to $64.5 million. Analysts had expected second-quarter earnings of 10 cents a share on sales of $66.2 million. Looking ahead, Ascential says third-quarter earnings and sales should be in line with second-quarter results. Analysts had expected earnings of 10 cents a share on sales of $66.5 million. Ascential Software's shares traded down $1.64, or 11.7%, to $12.38.

Other technology volume leaders included Microsoft, up 8 cents to $28.10; Oracle ( ORCL), unchanged at $11.20; Sun Microsystems ( SUNW), up 16 cents to $4.04; Intel ( INTC), up 23 cents to $26.34; Conexant Systems ( CNXT), down 5 cents to $2.26; Cisco ( CSCO), up 5 cents to $22.42; Veritas Software ( VRTS), down 4 cents to $16.96; EMC ( EMC), up 80 cents to $10.96; and Lucent ( LU), unchanged at $3.49.