Handspring cuts prices

May 7, 2001: 1:25 p.m. ET

PDA maker slashes prices, offers rebates as sluggish market persists

NEW YORK (CNNfn) - Handheld computer maker Handspring on Monday slashed the prices and is offering rebates on two of its most popular products as its faces slower sales and a more competitive pricing environment.

The Mountain View, Calif.-based company, whose "Visor" line of handheld computers -- also called portable digital assistants, or PDAs -- said it reduced the price of the Visor Deluxe, its best-selling product, to $199 from $249.

At the same time, Handspring said it would offer $50 rebates on purchases of its new Visor Platinum, which currently is priced at $299. The company also is offering $30 rebates of select expansion modules for its products.

The price cuts and rebates come at a time when Palm, the No. 1 supplier of PDAs, has been aggressively cutting the prices of its products. Palm in April slashed prices on a range of its products as part of an effort to move out a glut of inventory that has been sitting on retailers' shelves as consumers cut back spending in the face of a slowing and uncertain U.S. economy.

Palm has warned investors that the buildup of inventory, combined with costs associated with the rollout of its latest products, will result in an operating loss for the company in the current quarter.

Although Handspring licenses the Palm operating system from its larger rival -- making them partners in one respect -- the two companies also are competitors. In 2000, Handspring, which was founded in 1998, garnered 13.9 percent of the global market share, according to a study done by market research firm NPD Intellect.

Handspring executives also have warned that the slowing U.S. economy, as well as pricing pressure in the PDA market, will likely weigh on the company's profitability in the near term.

Shares of Handspring (HAND: down $0.87 to $12.16, Research, Estimates) were down more than 6 percent in afternoon Nasdaq trade Monday. Palm (PALM: down $0.04 to $8.35, Research, Estimates) shares also fell.