NEW YORK (Reuters) - Shares of Titan Corp. sagged Monday after U.S. defense contractor Lockheed Martin Corp. said it called off its planned acquisition of the information technology provider because Titan had not resolved a federal bribery investigation by a Friday deadline.

Shares of Titan (TTN: down $0.96 to $13.57, Research, Estimates) continued to fall after Friday's 20 percent loss, while Lockheed (LMT: down $0.59 to $51.38, Research, Estimates) shares edged up in mid-day Monday trading.

"Lockheed now has an additional $1.7 billion of cash to deploy, and its use of it should be a key to the performance of the stock," wrote J.P. Morgan Securities analyst Joseph Nadol, in a note to clients. "We view the repurchase of stock as the best use of cash given its low valuation."

Lockheed, which announced its decision on Saturday, has declined to comment on any specific uses of the $1.66 billion earmarked for the deal, saying only that it has used spare cash for an array of purposes in the past, including dividend payments, share repurchases, debt reduction, capital investments and acquisitions.

"Given the lingering uncertainty related to the Department of Justice and Securities and Exchange Commission investigations and the management distractions of the past few months, it's likely that our earnings-per-share estimates for Titan, of 74 cents in 2004 and $1 in 2005, will need to be revisited," wrote Credit Suisse First Boston analyst Adam Weiner, in a note.

"We suspect Titan will face more selling pressure in the short-term... . We reiterate our belief that the stock will soon settle in the mid-teens, perhaps in the $13 to $15 range, reflecting a modest valuation discount to its IT peers."

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Titan shares had tumbled on Friday by about 20 percent after the company said the day before that it was unlikely to reach a plea agreement with the Justice Department before Lockheed's June 25 deadline.

The news on Friday spilled over to the options pits. Almost 110,900 Titan options traded on Friday, more than 15 times its average daily volume, according to McMillan Analysis Corp. Options give the holder the right to buy or sell the stock at a predetermined price within a set period of time.