Handspring Sinks on Palm’s Woes

Handspring (Nasdaq: HAND) fell US$4.31 to $11.85 in morning trading Wednesday after rival handheld computer makerPalm (Nasdaq: PALM) issued a gloomy outlook for the current quarter, sayinga deteriorating economy has led to lower orders.

The drop came even as Handspring reaffirmed its financial targets for the fiscal year ending June 30th.

Analysts at Merrill Lynch and Banc of America Securities were said to havedowngraded Handspring following Palm’s announcement, while Credit SuisseFirst Boston reportedly reiterated a hold rating on Handspring.

Palm was down $6.94 at $8.56 after warning of an expected loss and lowersales for the current fiscal quarter. The company — which also reportedresults for the latest quarter that topped analysts’ expectations — said itplans to lay off about 250 employees and contract workers, and will postponeconstruction of a new headquarters building.

Donna Dubinsky, founder and chief executive officer of Mountain View,California-based Handspring, said her company is not feeling a similarpinch.

“While no company is immune to current economic conditions, we seecontinued sales growth in our business at this time,” Dubinsky said. “The growing acceptance of the Springboard expansion slot, now with 45 modules available, combined with the positive reception of our recently shipping Visor Edgeproduct, gives us confidence in our continued product and market momentum.”

The Springboard is Handspring’s primary technology platform. The Visor isthe company’s line of handheld computers, which competes with the PalmPilot.

The Visor Edge was introduced earlier thismonth to compete with the Palm V.

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