February 11, 2002 4:15 PM PST

Handspring takes off on Treo news

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Handspring shares soared more than 30 percent Monday after the company started selling its Treo handheld-cell phone combo device via its Web site.

As previously reported, the Treo is selling for $399 with activation from either Cingular Wireless or VoiceStream Wireless and is available either with a keyboard or with room to input text using the Palm OS' Graffiti characters. Customers also have the option of buying the unit without a service plan for $549.

However, the gadget won't be available immediately. Those who buy the device with service from Cingular, or without service, should have their unit in two weeks. Those who buy the device with VoiceStream service may have to wait up to four weeks.

Nonetheless, Handspring shares took off Monday. Shares closed at $5.90, up $1.49, or more than 33 percent.

Beginning to sell the device in the United States is a key milestone for Handspring, which has said it plans to phase out sales of its non-wireless organizers over time in favor of products like the Treo.

Still, J.P. Morgan analyst Paul Coster issued a note of concern Monday, cautioning that Handspring could face challenges as it tries to enable Treo owners to receive notification of new e-mail.

"We touched base with a private company that outlined a challenge Handspring has in delivering 'always on' e-mail to the Handspring Treo over GSM" (Global System for Mobile Communications) networks, Coster said in a research note. "The issue is how to wake the device up from sleep mode to accept inbound messages without a costly use of network call control to activate the device."

Coster said he was told by Handspring's investor-relations department that the issue would become moot once a software upgrade is released this summer, allowing the device to run on always-on GPRS (Global Packet Radio Service) networks.


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