The PC market may be depressed, but demand for PDAs - and those from Palm and Handspring in particular - remains high, according to a survey by US broker Bear Stearns.

The company claims 54 out of 100 retailers it contacted at the end of November said demand for PalmOS-based devices is running higher than expectations, with Palm and Handspring leading the pack.

"Demand is very, very strong for Palm and Handspring," said Bear Stearns analyst Andrew Neff yesterday. Sony's PalmOS-based Clié hasn't been doing too well, however, but given how pricey it is in comparison, we're not entirely surprised.

Customers are clearly targeting the cheaper models. Palm's m100 and now less expensive Palm V PDAs have sold out in some stores, said Neff. Handspring's main Visor models come in at the lower end of the overall PDA price range.

If Palm is indeed having supply problems, that will work to Handspring's advantage, allowing it to take sales it might not otherwise have made. But both companies need to keep a close watch on their ability to meet demand if Neff's bullish predictions of expectations-beating sales are to be realised.

Neff's comments and findings follow Goldman Sach's impressive write-up of Palm's prospects. The broker described Palm stock as a "compelling" buy.

"We are convinced that present supply is in check and the company will not miss the top line this quarter because of limited supply," it told Palm shareholding clients t'other week. ®

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