Software stocks declined in Friday trade after a Goldman Sachs analyst cut estimates on Oracle Corp. and Siebel Systems Inc. and warned the sector could face more hard times as European technology spending slows. 

Standard & Poor's computer software index -- a basket of software stocks -- declined nearly 3 percent to 769.93 as investors bid down the share prices of Siebel, Mercury Interactive Corp., Veritas Software Corp., PeopleSoft Inc. and other traditionally strong performers. 

Goldman Sachs computer software and services analyst Rick Sherlund said in a note to clients on Friday that the software business is ``likely continuing to worsen. ... Estimating results has been like catching a falling knife this year and we do not believe Street estimates yet capture the magnitude of capital spending constraints going into 2002, particularly considering anecdotal data coming out of Europe.'' 

Oracle, the most actively traded issue on the Nasdaq National Market, slipped 72 cents to $15.26 in midday trade after Sherlund clipped the No. 2 software makers' fiscal 2002 earnings estimate to 46 cents a share, from 48 cents a share. Goldman Sachs rates the stock a ``market outperformer.'' 

Siebel dropped $2.30 to $27.47 after Sherlund trimmed the company's 2001 earnings estimate to 56 cents a share, from 60 cents a share, and cut the 2002 estimate to 60 cents a share, from 70 cents a share. The stock is on Goldman's ``U.S. Recommended for Purchase List.'' 

Mercury Interactive fell 8.33 percent to $32.13. Veritas dropped 4.6 percent to $38.40, and PeopleSoft lost 3.54 percent to $39.26. 

Microsoft Corp., TIBCO Software Inc. and BEA Systems Inc. also were trading lower.