Google, Microsoft shares slump as results disappoint

NEW YORK (Reuters) - Shares of technology leaders Google Inc (GOOG.O) and Microsoft Corp (MSFT.O) stumbled in Friday morning trade after their quarterly results fell short of expectations.

An announcement of a wider-than-expected loss by chipmaker Advanced Micro Devices Inc (AMD.N), whose shares fell 11.3 percent to $4.70, added to concerns about the U.S. technology sector.

Internet search leader Google on Thursday reported a 35 percent rise in net profit, but that was lower than most analysts forecast, and particularly disappointing since Wall Street had come to expect positive surprises every quarter.

Google officials noted problems managing its cash -- now totaling $12.7 billion -- amid interest rate uncertainty, a drain from recent acquisitions, and higher costs to hedge foreign currency risk as it expands overseas.

Google shares fell $48.33, or 9.06 percent, to $485.11 by mid-morning trade.

Microsoft shares fell $1.82, or 6,61 percent, to $25.70 after the software maker posted a quarterly profit and outlook below the Street's expectations, and cited "tough" economic conditions.

In contrast, IBM (IBM.N) reported much stronger numbers, showing it was a defensive play and helping its shares rise $1.90, or 1.5 percent, to $128.42.

International Business Machines Corp said second-quarter net income rose to $2.77 billion, or $1.98 per share, compared to the average analyst forecast of $1.82 per share.

(Reporting by Ritsuko Ando, editing by Dave Zimmerman)