September 25, 2002 11:55 AM PDT
Handspring lays off 20 percent
Company spokesman Allen Bush said the cuts, which hit the marketing department hardest, are part of Handspring's effort to trim costs and focus on its Treo line of wireless handhelds as opposed to its traditional, nonwireless organizers.
"We're doing some reorganization to allow us to better focus the business," Bush said. The company will give further details on the cuts during its Oct. 17 earnings conference call, Bush said.
Employees were notified of the layoffs Monday. Handspring said the cuts will significantly lower the revenue level at which the company can break even.
Two vice presidents are leaving as part of the job cuts, which for the most part are effective immediately. Karen Sipprell, vice president of corporate marketing, and Glenn Noga, the company's chief information officer, were both affected.
Handspring's corporate marketing efforts will now report to Joe Sipher, vice president of product marketing; the IT department will report to the company's finance organization.
"The goal is to operate more efficiently in the areas we want to focus on--our communicator (products) and our relationships with carriers," Bush said.
Handspring CEO Donna Dubinsky said on a January conference call that the company planned to transition from being a maker of electronic organizers to a company focused on devices, like its Treo, that combine the features of a handheld computer and a cell phone.
Although the Treo has received favorable reviews, sales of the device have been sluggish.
"To date, Handspring's monochrome Treo 180 and color Treo 270 have shown anemic sales," Bear Stearns analyst Andrew Neff wrote in a research note in late August. This month he noted that sales of the new Treo 300, which runs on Sprint's network, seem to be headed down the same road.
Earlier this month, Handspring trimmed the price of the Treo 180.
Meanwhile, in addition to the two affected VPs, Mike Gallucci, manufacturing vice president, plans to retire later this year.
JP Morgan analyst Paul Coster said that the job cuts should help Handspring trim its costs, but said the company still has the deeper challenge of finding a way to sell more of its wireless Treos.
"It's not so much that they don't produce good products because they do," Coster said. However, he said such devices remain pricey and many consumers are waiting for such combination devices to get cheaper.
"The good news is the company can survive a long time," Coster said of the company's financial position. But, he added, "the overall prognosis remains quite dour because it is such a tough space."