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Handspring files for cautious IPO

Aims to raise over $190 million with eight per cent stake sale

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Palm clone maker Handspring disclosed details of its cautiously optimistic IPO this week. It will offer ten million shares - eight per cent of the company - priced between $19 and $22, which is just under what Palm itself is currently trading at (around $26) following the April collapse of hi-tech stocks.

The IPO - whenever it takes places; no date appears to have been set yet - will be an interesting test of Wall Street's attitude to loss-making IT companies. Handspring's Securities and Exchange Commission filing reveals it lost $21.5 million in the three months to 1 April well up from the $1.89 million it lost in the same period a year earlier. Of course, at that stage it wasn't shipping product, with all the marketing expenses and the cost of sale that that process involves, so the quarters aren't exactly comparable.

For the 1 April quarter, Handspring recorded revenues of $34.3 million, up from $15.8 million in the previous quarter, so it's certainly shipping product, and now that it has added wider retail channels to its own, initially-flaky Web-based direct sales operation, revenues should continue to grow. Retail sales didn't begin until the first week of April, so its too early to see how they will have affected Handspring's quarterly figures, but the company's Visor product quickly established itself as the top-selling Palm-based PDA. In short, the signs are good for continued revenue growth.

That, in turn, suggests Handspring shouldn't be quite so far from profitability than are the dotcoms and Linux companies that inflated the hi-tech stock bubble. But Palm's example implies that we shouldn't expect Handspring to buck the trend, and its shares will probably settle a little above the initial sale price.

Handspring's filing says it reckons the shares will go for $20.5 apiece, netting the company $190.2 million after expenses. The underwriters have an option on 1.5 million extra shares, available for sale if the demand is there, and if it is that would add some $219 million to the IPO's proceeds. Handspring will trade under the symbol 'HAND'. ®

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