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Palm to cut more jobs
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June 1, 2001: 1:34 p.m. ET
Handheld computing leader plans more layoffs as it faces a softer end market
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NEW YORK (CNNfn) - Handheld computer maker Palm Inc. said Friday it will lay off more workers during its fiscal first quarter, which ends in August, but it did not specify how many jobs will be cut, or from which divisions.
Executives at Palm did not immediately return phone calls seeking additional details. The company said it plans to provide more information about its work force reduction when it announces its fiscal fourth-quarter results during the week of June 25.
The latest cuts will be in addition to roughly 300 layoffs the company already has made in the face of a slowing economy and slackening demand for its products.
Palm (PALM: Research, Estimates) is the No. 1 supplier of handheld computers, a position it has held since it first introduced the popular Palm Pilot in 1996.
However, the company has faced an increasingly competitive threat from other vendors of devices that run on the Palm operating system, especially Handspring (HAND: Research, Estimates). The latest PocketPC devices, which are powered by Microsoft's (MSFT: Research, Estimates) newest version of its handheld computing operating system, also have been cutting into Palm's market share.
In response to the competitive threat, Palm has been slashing prices on its products. Handspring, whose Visor line of handheld computers compete against Palm's, has responded in kind.
On top of the competitive pressures and the slower overall demand for handheld computers, Palm has been burdened by costs associated with the rollout of its latest products, which executives previously warned will result in an operating loss in the fiscal fourth quarter, where recently they had expected a profit.
The current consensus estimate of analysts polled by First Call is for Palm to lose 19 cents per share in the fiscal fourth quarter.
Early last month, Palm introduced its latest handheld computers, the Palm m500 and the Palm m505, which sport new features such as color screens and expansion slots that allow for connections to other electronic devices.
In its statement Friday, Palm said it was encouraged by the initial reception of the new products, citing weekly surveys by market research from NPD Intellect that show Palm's total market share rose from 60 percent to 67 percent since the m500 series became available at retail stores.
"Despite the soft market, our efforts are beginning to show results," Palm CEO Carl Yankowski said.
"We're encouraged by the popularity of our new products and the uptick in retail sales of our existing products as well," Yankowski added. "We're pleased with customers' response to our marketing and sales-incentive programs introduced over the last two months, and we're gratified by the report of share growth as we complete this significant product transition."
Shares of Palm rose more than 7.8 percent Friday afternoon on Nasdaq. 
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