Updated from 2:07 p.m. EST with new stock prices

Small-cap stocks fell hard Thursday, making the major indices' losses look mild by comparison. The Russell 2000 shed 3% to 773.52.

Lowered guidance hurt several companies on the down day. Shares of Fremont, Calif.-based Avanex ( AVNX), which makes fiber-optic products, took a 28.9% hit to 97 cents as the company announced that revenue for its fiscal second-quarter would be between $51 million and $53 million, which falls below the low end of previous guidance of $56 million to $58 million. Avanex is filing an arbitration complaint against French optical modules maker 3S Photonics for prematurely ending its exclusive distribution agreement with the company.

Shares of Sterling Financial ( STSA), meanwhile, slipped 10.9% to $17.44 on lowered fourth-quarter guidance. Thanks to an increased charge for credit costs, the Spokane, Wash., bank now expects fourth-quarter EPS of 31 cents to 34 cents and full-year EPS of $1.84 to $1.87. Analysts polled by Thomson Financial forecast income of 53 cents a share for the quarter and $2.09 for the year.

Another bank, United Community ( UCBI), dropped 13.9% to $15.26. Citing "continued deterioration in the housing and construction markets," the Blairsville, Ga., company increased its fourth-quarter loan-loss provision to $3 million, or 4 cents a share. United Community now forecasts operating EPS in the range of 12 cents to 14 cents, well short of the Street's expectation of 43 cents.

Despite the overall gloom, several stocks reaped huge gains. Shares of American Dental Partners ( ADPI) blasted 84.8% higher to $10.20. The Wakefield, Mass.-based provider of services to dental group practices settled a lawsuit with PDG, a client to its Minnesota subsidiary, PDHC. PDHC will transfer leases and associated tangible assets of 25 of 31 Park Dental facilities to PDG and forgive about $3 million in accounts due from PDG. PDHC will keep six facilities and the resource group office, which includes a support team of about 35 people, and PDG will pay PDHC a management fee of some $19 million.

Document Sciences ( DOCX) also took a giant 76% leap to $14.49 on news that tech giant EMC ( EMC) would buy the Carlsbad, Calif.-based maker of content publishing software. EMC will shell out $85 million, or $14.75 a share, in cash for the company, subject to approval. The purchase is expected to close in the first quarter of 2008. Shares of EMC lost 2.4% to $18.50.

Also posting a solid gain was Chinese telecom Qiao Xing Universal Telephone ( XING). The company raised guidance for the fourth quarter of 2007 on improved sales of its CECT- and COSUN-brand mobile phones. Qiao Xing forecast positive earnings per share for the fourth quarter and record EPS for the full year in 2007. Shares jumped 17.6% to $8.97.

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