Earnings of 34 cents a share beat 30-cent estimates, and revenues of $10.15 billion exceeded $9.74 billion forecasts. Microsoft also raised quarterly and full-year guidance above forecasts, but investors focused instead on the huge expansion in stock-based compensation that shaved 20 cents a share off net income, sending the stock lower after hours.

Also after the close, Scientific Atlanta, KLA-Tencor, StorageTek, Vitesse, Genesis Microchip, UTStarcom and Corning all beat estimates.

During the day, tech stocks again fell victim to profit-taking.

The Nasdaq lost 23 to 2119, the S&P 500 slipped 3 to 1143, and the Dow was down less than a point to 10,623. Volume declined to 1.69 billion shares on the NYSE, and 2.36 billion on the Nasdaq. Advancers led 17-15 on the NYSE, while decliners led 20-11 on the Nasdaq. Downside volume was 59% on the NYSE, and 70% on the Nasdaq. New highs-new lows were 517-1 on the NYSE, and 301-7 on the Nasdaq.

eBay surged 8% to a new all-time high on better than expected results and guidance.

Lucent and Nortel tumbled on weak capital spending guidance from AT&T.

Netflix and F5 soared on their results, and Symantec, Xilinx, Citrix, Nokia, Overland and Openwave rose on their reports.

Sandisk, Siebel, Qualcomm, Check Point, Tellabs and EMC declined on their reports.

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