Handspring pins hopes on Treo to restore sales growth

Handspring whose handheld Visor computing devices compete with the popular

Palm systems, said it suffered a $19.8 million loss in the last three months of

2001, an increase over the $15.2 million lost a year earlier. Sales fell 39 per

cent to $70.5 million, from $115.6 million last year.

The increased loss came despite an upturn in sales of its pocket-sized Visor.

Company officials said the second quarter sales were up 15 per cent from the

first quarter and they see revenues improving further to around $90 million as

the company rolls out its new Treo device, which integrates the functions of a

handheld computer with a cell phone. But a key component supply problem has

slowed production of Treo.

Handspring CEO Donna Dubinsky said Treos have been shipped to marketing

partners in Europe and Asia, and would likely begin sales in the US via the Web

in February and at retail by March. "We feel very good about our ability to

scale our production line. I am pleased that we were able to achieve our

business objectives for the quarter. We participated well in the holiday demand,

and exited the quarter with channel inventory within our target range."

Dubinsky remains optimistic that consumers will warm to Treo, which has been

lauded by media and has drummed up considerable buzz at trade shows since its

unveiling in October. She said the price of the device should not impede sales.

"We have seen great success of high-end phones in the past," Dubinsky

said. 'Clearly the Treo is at a price point for the type of consumer we are

going after. This is within their means."

Handspring has signed an agreement with British mobile phone group mm02 Plc.

to distribute Handspring's new Treo phones in Europe. It also announced a

distribution agreement with Swedish distributor APE Telecom to market Treo in

Sweden.