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Updated from 1:15 p.m. EST

Sellers leaned into a pair of tech names Friday, sending both





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to double-digit percentage losses on concerns about future earnings.

Shares of handheld-device maker Palm tumbled $1.22, or 9.34%, to $11.84, on double the average daily volume in midday trading after J.P. Morgan cut its rating. Security software giant Symantec gave up $6.89, or 14.6%, to $40.47 on reports that executives speaking at an analyst meeting made conservative comments about the company's revenue picture for 2004.


The J.P. Morgan action on Palm reflected concerns about both the company and its sector.

"We believe demand has softened in the consumer and business segments in the second half of 3Q03, and that immediate prospects look bleak in the context of uncertain macro conditions and a broad dropoff in demand in PDA sales," said J.P. Morgan's Paul Coster in a client note this morning. J.P. Morgan reduced Palm's rating to underweight from neutral.

Coster also highlighted Palm's decision this week to lay off 19% of its workforce, a move that affects about 200 employees. "The magnitude of the cut is in response to dire market conditions and not just good housekeeping," said Coster. "Much of the cut may come from the PalmSource division, jeopardizing the planned spinoff somewhat."

The downgrade caught Palm during an organizational overhaul in which it is expected to split the hardware division that manufactures Palm organizer and communicator devices from its operating system development unit. The split is expected some time early this year.

Palm is also faced with a global halt in demand for its line of products. Worldwide shipment of handheld devices dropped 9.1% to 12.1 million units last year, according to a recent study conducted by tech research firm Gartner Group.

To combat the waning desire for nifty gadgets, the company has sought to exploit both the entry-level consumer market with low-priced devices, as well as bolster its high-end business offerings. Last week, the company launched its first email handheld that includes phone functions, called the Tungsten W. AT&T Wireless is expected to begin selling the product.


Shares of Symantec were pounded in the wake of apparently disappointing guidance from the company Friday morning. The company also made a presentation in which it forecast 2004 earnings of $1.88 a share, which is 4 cents below the consensus estimate as gathered by Thomson Financial/First Call.

Moreover, the earnings guidance was heavily backloaded; the company expects quarterly earnings in fiscal year 2004 of 38 cents, 40 cents, 55 cents and 55 cents. Analysts had also backloaded their estimates to reflect the company's normal seasonality, but not as much. According to First Call, analysts expect earnings of 44 cents, 45 cents, 52 cents and 52 cents.

A spokeswoman for Symantec expressed surprise at the drop, noting that the company's guidance for the year was unchanged, and that it hadn't given quarterly guidance for 2004 until today.

Caught in the whirlpool were several other stocks in the security sector --

Network Associates

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, down .44 cents, or 2.9% to $14.72 and

Internet Security


, down 51 cents, or 4.34%, to $11.25.