Handspring cuts a fifth of its workforce

Tightens belt

Handheld maker Handspring cut 20 per cent of its work force - about 80 employees - this week.
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, non-wireless PDAs. "We're doing some reorganisation to allow us to better focus the business," Bush said. The company will give further details on the cuts during its 17 Oct results conference call, Bush said. Employees were notified of the layoffs on 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 CIO, 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 organisation. "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 in a January conference call that the company planned to transition from being a maker of electronic organisers to a company focused on devices, like its Treo, that combine the features of a handheld computer and a mobile phone. Although the Treo has received favourable reviews, sales of the device have been sluggish. "To date, Handspring's monochrome Treo 180 and colour Treo 270 have shown anaemic 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 US 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 move 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." Ian Fried writes for CNET News.com.