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Palm's financial problems, outlined at week's quarterly results announcement, sent panic among investors yesterday. The company's shares lost nearly half their previous value, after trading at ten times the stock's average volume.

Shares closed at 8.0625, but the stock fell to 7.4375 during the day's trading - an all time low.

All this vigorous trading followed Palm's Q3 results, which not only saw the company return to the red, but included a warning that Q4 isn't going to be much better. Growth will be negligible - 'negative' might be a better word, once you've looked at the figures; revenue won't match Q4 2000's $350 million, but reach $315 million - but marketing will go into overdrive to promote the new m50x family of PDAs, launched this month but not shipping until May at the earliest.

Palm's inventory rocketed from $34 million in the second quarter to $102 million, which may explain why the company is holding off shipping the new PDAs - it wants to clear out all those unsold older models.

They're not selling as well because of the sudden success of Compaq's iPaq. Ironically, that's holding back the release of the very designed to compete directly with the iPaq, the m505.

Palm's warning had a knock-on effect on other PDA makers. PalmOS licensee Handspring fell 32 per cent to 10.875. Psion, trading in London, closed ten per cent off at 117.5 pence. ®

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