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After a slow climb during the height of a generally positive earnings season, the IT-heavy Nasdaq hit turbulence this week, with a mixed earnings report from Cisco, and merger and acquisition news and rumors involving Microsoft, Yahoo, Deutsche Telekom and Sprint Nextel.

The Microsoft-Yahoo saga depressed the market at the start of the week. Big deals usually boost tech stocks on the market, since they call for vendor confidence that future sales will make up for any dilutive effect on earnings that acquisitions usually entail.

Despite Yahoo CEO Jerry Yang's insistence that he would have agreed to sell the company for the right price, he appeared to do everything possible to torpedo the deal, including striking an agreement with archrival Google to outsource search advertising. But Microsoft CEO Steve Ballmer, while noting in a statement Saturday that the Google deal was the straw that broke any hope of agreement on a price, appeared over the past week or so uncharacteristically ambivalent about the bid's potential success.

In an understatement, Citigroup Global Markets called Yahoo's future "uncertain" and lowered its rating on the company to "sell." Yahoo shares dropped to US$24.37 Monday, from $28.67 before the weekend, though they recovered somewhat during the week as Yang and other company executives insisted that they still would be willing to negotiate on price. If Yahoo's deal with Google does not help boost profit, and Yahoo's share price stays in the doldrums, look for Yang to be gone by the end of the year, and Microsoft and Yahoo to be in talks again.

Meanwhile, rumors that Deutsche Telekom is talking to Sprint about an acquisition helped boost Sprint shares this week. Sprint closed at $7.89 last week and by midweek was trading at $9.16. A deal, along with T-Mobile, would make the combined company the U.S. wireless leader ahead of AT&T and Verizon, but would be more complicated than a merger of two U.S. companies, observers noted. Rumors that Sprint is looking at selling or spinning off its Nextel unit further muddy the waters.

The giant deal, announced Wednesday, that Sprint and Clearwire will form a joint venture worth $14.5 billion to deploy the first nationwide mobile WiMax network, caused Sprint shares to flatten out a bit midweek, as traders considered the impact that the investment will have on Sprint's bottom line. Sprint will own the largest stake in the new company, approximately 51 percent.

While most tech bellwethers have already released first-quarter earnings, Cisco Systems weighed in this week, reporting that revenue rose more than 10 percent, to $9.8 billion, from the year-earlier quarter. Profit fell by 5.4 percent to $1.8 billion, mainly due to an acquisition charge and other extraordinary events. Still, revenue was below the 15 percent growth the company expects long-term, and CEO John Chambers blamed a slow U.S. economy -- a sign that, despite generally solid earnings from IT vendors recently, there is still uncertainty on the part of tech buyers.