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Palm cut prices on three soon-to-be-retired models yesterday in a bid to tackle the build-up of excess inventory, including $100 million worth of unsold PDAs left over from last quarter and the $200 million worth of kit expected to remain in Palm's warehouses and the channel at the end of the current quarter.

So the Palm Vx - which will effectively be superseded by the m500 - is down $50 to $299. Its price was also cut when the m500 was announced last month. The Palm IIIc will now be priced at $299, down $30, though this cut had already been made through a discount programme. The consumer-oriented m100, recently followed up with the m105, falls $20 to $129.

Palm hopes the price cuts will spur demand, but the cuts seems sufficiently shallow to provoke the company's competitors into slashing their own prices and thus beginning the price war at least one Wall Street analyst has predicted. Handspring said it will not cut its prices in response to Palm's move.

Alongside the price cuts, Palm CFO Judy Bruner yesterday said the company would also focus on the management of its cashflow with moves to free capital tied up in its proposed move to a new corporate HQ and to renegotiate component contracts signed last year at a time of high demand and low supply. ®

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