Palm cuts prices on older models

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By George A. Chidi Jr.

(IDG) -- A month after introducing new handhelds with expansion slots, Palm told analysts Wednesday that it would cut prices on some older models.

Palm is reducing the price of its entry level m100 model to $129 from $149. The color Palm IIIc handheld and the black-and-white, sleeker form-factor Palm Vx model will each now be $299, cutting $50 from the Vx price and $30 from the IIIc.

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"Palm is indeed trying to move inventory aggressively and wisely," Palm said through a spokesperson from the company's public relations firm. "In addition to the price drop, we have initiated new in-store promotions and new point-of-sale displays in the retail environment." Other computer vendors have also reduced prices in recent months, as their bottom lines feel the effects of the ongoing economic downturn, and competition for market share heats up. The company also said on Wednesday that it had extended its licensing agreement with Handspring for the Palm operating system through April 2009. The licensing deal is nonexclusive; Handspring may choose to use another OS in its product.

During the third quarter ending in February, Palm licensees paid $8.6 million to the personal digital assistant maker. Palm wants to make more money from licenses eventually, but in the third quarter most of its revenue -- $451 million in sales -- came from Palm hardware.

Palm sales dropped sharply in March of 2000, the company said in its March earnings conference at the end of the month, noting that it expected weaker sales this year for the same period.

Palm reported $470.8 million in revenue for the third quarter in March, with pro forma profit of $9.3 million -- $0.02 cents per share -- beating analysts' estimates by a penny. But facing a general economic slowdown and unable to see when glory days will return for the technology market, the company says it will eliminate 250 jobs and postpone construction on new corporate headquarters to cut costs.

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Palm debuts two slim, expandable handhelds
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Handspring sees bright times for phone PDAs
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Palm Inc.

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