Also feeling post-earnings weakness, Sun Micro and AMD joined the after-hours slide.

The Nasdaq-100 After Hours Indicator, which tracks the evening action of the index's leading technology stocks, fell 11 points to 1,050.

Earlier, heightening tensions in the Persian Gulf pressured stocks as the Nasdaq Composite closed down 15 points, or 1 percent, at 1,424 and the Dow Jones Industrial Average finished the day off 25 points at 8,697. See Market Snapshot.

Microsoft slips

Microsoft (MSFT) announced a two-for-one stock split and said it will unload some of its $40 billion pile of cash by paying an annual dividend of 16 cents a share for the first time in the company's history. See full story.

Microsoft also beat earnings expectations by a penny a share as revenue rose about 10 percent from a year earlier. The stock closed down 81 cents at $55.46 before slipping to $53.35 after the close.

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Heavy hardware hitters report

IBM (IBM) posted fourth-quarter earnings from continuing operations of $1.9 billion, or $1.34 a share, compared to $2.6 billion, or $1.46 a share, a year ago. Revenue was $23.7 billion vs. $22.1 billion the year before. See full story.

Analysts surveyed by Multex were looking for the hardware bellwether to earn $1.30 a share on revenue of $23.2 billion. Shares of IBM fell almost 2 percent after finishing the regular trading session at $86.05.

And Sun Microsystems shares (SUNW) lost 25 cents in late action after the server giant reported a pro forma profit of $10 million to break even on a per-share basis, topping 2-cent loss estimates. See full story.

Advanced Micro Devices (AMD) reported a loss much wider than analysts expected and revenue that was slightly less than expected. The chipmaker said first-quarter sales would be flat to nominally higher. Ahead of the announcement, shares ended down 3.5 percent to $7.19 falling 6 percent late. See full story.

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