Palm Cuts Prices in the Face of Excess Inventory

Palm is marking down the prices of almost all their handhelds in response to excess inventory. The Palm Vx is being reduced by $50 to $300, its second price reduction in a month. The Palm IIIc is getting its $30 discount made permanent, so it it now also $300. Finally, the price of the m100 is being cut by $20 to $130.

These cuts were announced today at an analysts' meeting and have already taken effect on the Palm Store.

At the end of their last fiscal quarter, Palm had over $100 million in unsold inventory on its books and it's possible that another $200 million in inventory may pile up this quarter. Analysts have cited Palm's excess inventory as being one of the top reasons for downgrading their ratings of its stock.

A Handspring spokesman has already said that his company doesn't plan to cut prices in response to Palm's announcement and isn't experiencing an inventory glut.

However, a Lehman Brothers analyst wrote earlier this week, "Given the high levels of inventory at Palm and in the channel, we believe there could be the potential for a price war come May, which would have a negative impact on both Palm and Handspring."

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• Palm Vx Reduced to $350

• Palm cuts prices to deal with product glut