Updated from 2:58 p.m. EST with new stock prices

Tech stocks were flat Tuesday as a disappointing earnings report from VMware ( VMW) combined with Wall Street pinning its hopes on yet another interest rate cut from the Federal Reserve.

Shares of Sprint Nextel ( S) rose 83 cents, or 8.3%, to $10.80 following a Wall Street Journal report that the company is in talks with Clearwire ( CLWR) to create a high-speed wireless network using WiMax technology. Shares of Clearwire soared $2.89, or 23.2%, to $15.34.

Video-games publisher Take-Two Interactive ( TTWO) added 69 cents, or 4.4%, to $16.44 after an analyst at Lehman Brothers upgraded the stock to equal weight from underweight and set a price target of $19 for the stock. With the April release of the company's much-anticipated game, Grand Theft Auto IV, nearing and a new slate of game releases for the year, Take-Two could be poised for a turnaround, said the analyst in a research note.

VMware plunged 33.9% after the company disappointed investors with its fourth-quarter results and said 2008 revenue could decelerate to 50% growth. For the fourth quarter, VMware said revenue rose 80% from a year ago to $412.5 million. That was lower than analysts' expectations of $417.4 million. Excluding items, EPS was 26 cents, two cents ahead of analysts' expectations. Shares of VMware were down $28.13 to $54.87.

Shares of EMC ( EMC), which has a 85% stake in VMware, fell $1.02, or 6%, to $15.89 despite a strong earnings report. EMC reported a 19% increase in the fourth quarter to $3.83 billion, higher than analysts' expectations of $3.66 billion. Net income was up 35% to $525.7 million and excluding items, EPS was 30 cents. Analysts were looking for 22 cents a share. EMC also said a challenging economic environment in 2008 could lead to a slowdown in IT spending worldwide.

Yahoo! ( YHOO) was up 3 cents, or 0.1%, to $20.81 ahead of the company's fourth-quarter earnings report. Analysts expect EPS of 11 cents on revenue of $1.41 billion for the fourth quarter, compared with EPS of 19 cents on revenue of $1.22 billion a year ago. Yahoo! has guided for revenue between $1.31 billion and $1.45 billion. For the first quarter, analysts are expecting earnings of 12 cents a share on revenue of $1.37 billion.

Chinese search giant Baidu ( BIDU) fell $20.61, or 7.1%, to $270.71 after a Wall Street firm rated the stock a sell. An analyst at Canaccord Adams set a price target of $265 and said the company is investing in new ventures that have no prospects of revenue in the short term and has not yet filled the position of chief financial officer.

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