Handspring chips away at prices

Handspring, one of the leading sellers of handheld devices using the Palm operating system, has cut prices on two models after a similar move by a competitor last month.

The price of Handspring's Visor Deluxe has been reduced by $50, or 20 percent, to $199, according to the company's Web site. In addition, Handspring is tossing in a leather case valued at $24.95 and free shipping.

Handspring also initiated a $50 mail-in rebate for the higher-end Visor Platinum--described as being 50 percent faster than the Deluxe--that lowers the price from $299 to $249. The rebate offer is good from Friday through June 17.

The price cuts come amid a broad decline in sales of Palm OS-based devices.

On Wednesday, Palm Chief Financial Officer Judy Bruner said the latest numbers from research company PC Data show that Palm's sales at U.S. stores fell 20 percent from January to April.

To help spur sales, Palm in April cut the price of its Palm Vx from $349 to $299 and said it would reduce the low-end m100 from $149 to $129. At the time, the company said it could have an additional $200 million in unsold inventory this quarter, on top of $100 million in inventory still left from the end of last quarter.

One day after the Palm price cuts, Handspring posted a third-quarter loss and warned of "softness" in handheld computer sales.

"It is clear that the current economic slowdown is having some impact on near-term growth," Handspring CEO Donna Dubinsky said.

Asked about the possibility of matching Palm's price cuts, Dubinsky told analysts Handspring's models are priced appropriately and noted that many of the products are new. Still, she said, "to the extent we need to respond, we will."

Palm shares gained 15 cents to close at $8.39 Friday, well below their 52-week high of $67.37. Handspring shares fell $1.42 to $13.03, down from a 52-week high of $99.31.