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  1.    #1  
    Get your hands on Today's Wall Street Journal. Page 1 article on Handspring and the Treo.
  2. #2  
    Thanks!
    I have never let my schooling interfere with my education.
    -Mark Twain
  3. #3  
    Very depressing front page article--only enough cash to last until early 2004??? Trying to raise capital?? Even with a blockbuster new communicator this fall, how can they make enough $$ to survive against heavyweights like Sony & Palm??
  4. #4  
    would one of you that subscribes to WSJ, email me this article? I would greatly appreciate it. please email it to torekov1@hotmail.com thanks in advance.
    Martin
  5. #5  
    Alas, I also do not have a wsj subscription... anyone want to cut/paste the article here? is that legal?
  6. #6  
    I only have subscribe to the newspaper, not the on-line site hence do not have an digital version of the article. jposin was correct it is depressing.
    A brief summary of the article: When the pda market slowed in '01 HS didn't trim sales forcasts fast enough, leaving excess inventory. Eventually they got in a price war with Palm that cut profits further. Additionally, "Sony could just come and eat us" said Dubinsky. Eventually Hawkins won the debate to commit totally to the coummunicator (over Colligan who wanted to keep some of the pda product line). "We could only invest in one thing" said Dubinsky.
    Initially HS tried to link up with every wireless operator, some were not interested, some wanted features changed. T-mobile was lukewarm in their reception and Cincular viewed it as a niche product. Initial sales were below forecasts. HS cut staff from 450 to 250. In mid '02 HS got a boost from the Treo 300 that was tailored to Sprint's network, some stores initially sold out and Sprint increased their order from 50k to 85k units. Sales however remain below the expectations that were the basis of HS's bet: Revenue in the quarter ending March 31 shrunk to $31M from $60M a year ago. Treo market share ranks #5 in combo devices with 4.1% world wide. (Nokia 57%, SonyEricsson 11%, Samsung, then Mororola).
    HS stock, trading below $1 since Jan could be delisted b the Nasdaq exchange. "Without additional financing, we believe the company could run out of cash in June '04" says Ray Sharma, an analyst at BMO Nesbit Burns. HS says it has enough cash to last through this year "and beyond".
  7.    #7  
    Originally posted by gfunkmagic
    is that legal?
    Nope. I don't think that falls under "fair use" though I'm sure no one has ever been penalized for cutting and pasting a single article.
  8. #8  
    Interestingly enough, Handspring's stock was around its lowest at the beginning of this month (about 63 cents) and yet has been steadily climbing (for the most part) since then. It closed at 91 cents today. Go figure.

    Scott
  9. #9  
    Hit by Downturn, Tech Firms Are Forced Into Tough Choices
    Handspring Stakes Its Future On the Cellphone/Organizer

    By PUI-WING TAM
    Staff Reporter of THE WALL STREET JOURNAL

    MOUNTAIN VIEW, Calif. -- In December 2001, Chief Executive Donna Dubinsky pushed the button on a companywide e-mail that would change the course of Handspring Inc., a small but celebrated maker of hand-held organizers. It was a gamble the technology downturn forced her to make.

    For months, executives at Handspring had debated two options for its future. Sales of its core products, organizers using Palm Inc. software, had shriveled. Some executives wanted to dump the devices and focus Handspring's dwindling resources on an unproven new gadget: a combination organizer and cellphone. Others argued Handspring should keep its old organizer line as a hedge.

    Ms. Dubinsky's e-mail announced the verdict: Handspring would make the unhedged bet, shutting down its old organizer business to focus solely on the new combination gadgets, which offered higher margins. "We couldn't afford to do everything," says Ms. Dubinsky. "We could only invest in one thing."

    So far, the bet hasn't paid off. Handspring quickly discovered its old business habits didn't work in the cellphone industry, where mobile-service carriers control retail sales and insist on lots of special customized features. And demand for combination devices was slow to materialize.

    Sales of Handspring's new product, the Treo, have been sluggish, with about 180,000 sold since January 2002. The global market last year for Treo and its rivals was $1.4 billion, according to International Data Corp. -- compared with $3.1 billion for the old-style organizers that Handspring tossed aside.

    These are still relatively early days for the entire hand-held industry, and Handspring believes its technology is on the cutting edge of a combo-device market that is poised to take off. The Treo has won plaudits from technology experts, and the device has some very loyal fans.

    Yet even if the market explodes, Handspring will still face big competitors with resources to make a broader range of technology bets. Sony Corp. is working on both simple organizers and combination devices. Palm, which licenses its software to Handspring, is also working on hand-held combinations.

    All over Silicon Valley, smaller tech companies are being forced to make similarly tough choices over which futures to scuttle. As the downturn drags on, tech giants such as Hewlett-Packard Co. and Cisco Systems Inc. still have the wherewithal to support a large portfolio of new products. But smaller companies, with dwindling cash balances and fallen stock prices, are increasingly staking their futures on single products -- increasing the gap between the tech haves and have-nots.

    Openwave Systems Inc., a wireless-software company in Redwood City, Calif., last year narrowed its focus to a core technology that allows cellphone users to surf the Internet. It cut down on other products such as wireless messaging. Still, Openwave's net losses are growing amid sliding revenue. The bet on the single technology "is certainly not a sure thing," says Richard Wong, a senior vice president. "In Silicon Valley, the hype in the boom times got ahead of the technology, and now companies have to find ways to survive the perfect storm."

    Some tough bets could pay off. Opsware Inc., a Sunnyvale, Calif., software company, has seen its net losses narrow over the past few quarters after focusing only on software -- while ditching a business in which it helped automate and manage Web sites. Founded in 1999 under the name Loudcloud Inc. by Netscape Communications whiz Marc Andreessen, the company has shed 200 of its 350 staff, and hasseen sales continue to decline amid the narrowed losses. "It was traumatic internally," says Ben Horowitz, Opsware's chief executive. "We had to make a decision."

    Handspring's crunch marked a big change for a company whose 1998 birth was celebrated as a Silicon Valley event. The company's co-founders -- Ms. Dubinsky, Ed Colligan and Jeff Hawkins -- had also founded Palm, where they invented the Palm Pilot and spawned the hand-held computing industry. Mr. Hawkins was renowned as the technical mind behind the invention, with Ms. Dubinsky and Mr. Colligan jointly regarded as the operational and sales gurus.

    After launching Handspring with money from eager venture-capital firms, the trio quickly took it public in June 2000 at $20 a share. The stock zoomed to $95.47 at its peak in late 2000, valuing the stakes of Mr. Hawkins, Ms. Dubinsky and Mr. Colligan at, respectively, $3.9 billion, $2.1 billion and $580 million. Handspring vaulted to No. 2 in organizer market share, after Palm. "Whammo, we went from nothing to $125 million in revenues a quarter," says Mr. Colligan.

    The plan was to generate quick sales with simple low-cost organizers, and then develop gadgets that combined organizers with cellphones. But the organizer market began to slow in March 2001. Ms. Dubinsky trimmed sales forecasts and component orders, but not fast enough, and unsold Handspring devices piled up. "Demand went flat overnight," she says. When Handspring slashed prices, it started a price war with Palm that cut profits further.

    Handspring's liquid resources -- cash and short-term investments such as Treasury bills -- have fallen to $53 million from $112 million at the end of 2001, and it is now seeking additional financing. Its shares have traded below $1 since January, which could lead to its stock being delisted by the Nasdaq exchange. "Without additional financing, we believe the company could run out of cash in June 2004," says Ray Sharma, an analyst at BMO Nesbitt Burns. Handspring says it has enough cash to last through this year "and beyond."

    Handspring was growing particularly alarmed about competition from Sony. By mid-2001, the Japanese giant was introducing new hand-held devices at a rapid pace. Sony also formed a joint venture with Sweden's Telefon AB L.M. Ericsson to make combination devices and cellphones. "Sony could just come and eat us," says Ms. Dubinsky. "We didn't have their brand or scale."

    That led to the company's crucial decision. "We have to reassess everything," Ms. Dubinsky told her co-founders. Handspring axed some hand-held projects in mid-2001, including a color-screen version of a thin organizer. It trimmed research spending. Still, it had to slash more, setting off debates between Messrs. Colligan and Hawkins. The 6-foot-4 Mr. Hawkins often towered over Mr. Colligan in discussions, but Mr. Colligan had a booming voice that countered him. Mr. Hawkins wanted to shed the simple-organizer business for the new combined gadgets. Mr. Colligan wanted the hedge of the old products.

    They aired their conflicting views at a September 2001 company meeting at a resort near Monterey, Calif. "It's not worth my time just to do an organizer," Mr. Hawkins recalls saying. "Let's do something useful" such as the combo device, he said. "It's the future." Mr. Colligan noted that simple organizers were still bringing over $70 million in quarterly revenue, arguing, "We need to feed the cash cow a little more."

    The debate spilled into a meeting three months later at a Carmel, Calif., resort. The deadlock only broke after company research showed potential profit margins of 30% to 40% for combo devices, compared with margins in the low teens for simple organizers. Mr. Colligan capitulated, and Ms. Dubinsky sent her e-mail announcing the end of Handspring's old organizer line.

    Handspring was entering an arena where the rules of business would be entirely new. With hand-held organizers, the formula was simple: Make a product, run ads and push the device into retail channels. With cellphones, hardware makers generally cede control to carriers such as T-Mobile, a unit of Deutsche Telekom AG, and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC -- the companies that sign up and bill subscribers. The carriers often sell cellphones through their own stores.

    At first, Handspring approached its new business just like its old, offering Treo through electronics stores and similar retail outlets. Handspring also tried to link up with every wireless operator, instead ofstriking close partnerships with just a few. Some carriers declined even to meet with Handspring officials. Others showed no interest in the Treo or wanted the device to have additional features. In one meeting, recalls Handspring engineer Mitch Allen, a carrier's representatives took one look at the Treo and asked, "Where are the red and green buttons?" Cellphone users are accustomed to simple red and green buttons for taking and ending a call.

    Cole Broadman, chief development officer at T-Mobile, met with Handspring in late 2001 but says he wasn't "knocked over by the Treo." T-Mobile was looking for devices that work with its more advanced wireless networks, and the Treo wasn't compatible with that technology. "I think Handspring found out quickly they couldn't take a one-size-fits-all approach," says Mr. Broadman. Steve Krom, a vice president at Cingular Wireless, says the wireless carrier initially viewed the Treo as "a really niche product" that needed to mature to support corporate e-mail and other office applications.

    Moreover, the market Handspring bet on failed to materialize as quickly as it had hoped. The Treo and other such devices were priced so high -- at around $500 -- it was often cheaper for consumers to keep buying organizers and cellphones separately. Some 1.9 million combo devices were sold world-wide in 2001, rising to just under four million in 2002, according to the Gartner Inc. research group. Yet some 12 million simple organizers were sold last year. While organizer sales have slowed, some 2.5 million were still sold in the first quarter of 2003, compared with 1.7 million combined devices.

    "I thought the Treo would take off faster," concedes Mr. Hawkins, based on the pattern of the first Palm Pilot. The upshot: In the first quarter of Treo sales between January and March 2002, Handspring's revenue fell to $60 million from $124 million the first three months of 2001. The company's cash slid to $100 million in June 2002, from $112 million six months earlier.

    Cost cuts helped Handspring narrow its net losses. The net loss for the fiscal year ended June 2002 totaled about $92 million, compared with a net loss of $126 million for the prior fiscal year.

    Meanwhile, competitors had quickly stepped in to grab the market share Handspring had abandoned. Executives at Palm, the market leader, privately crowed over the opportunity to pick up Handspring's business, releasing two new models of simple organizers just three months after Ms. Dubinsky's announcement. Sony introduced new organizers with a novel twist: sharp color screens that swiveled 180 degrees. Low-cost giant Dell Computer Corp. entered the market in late 2002.

    At Handspring, morale took a beating. It cut staff to 250 from a peak of 450, reducing costs to $20 million a quarter from $45 million. Informal employee talks that Mr. Colligan hosted, officially called "Get Said by Ed," came to be informally dubbed "Get Bled by Ed." A string of executives resigned. "Everyone was waiting to get laid off," says Claire Dean, who resigned this year as brand-marketing director.

    Handspring got a rare boost in mid-2002. Sprint Corp. wanted new data-and-phone devices and had earlier invested several million dollars with Handspring to develop and tailor the Treo to Sprint's network. When Sprint launched the Treo through its outlets in August 2002, some stores sold out. People familiar with the deal say Sprint increased its initial Treo order to 85,000 units from 50,000. A Sprint spokeswoman confirms demand exceeded original supply and that the carrier increased its orders.

    To Ms. Dubinsky, the Sprint success was a breakthrough. "This is the formula we have to replicate with carriers," she told her team. Handspring executives recently signed a similar deal with Orange SA, one of Europe's largest wireless operators. Yet sales remain below the expectations that were the basis for Handspring's bet: Revenue in the quarter ended March 31 shrunk to $31 million from $60 million a year ago.

    Handspring has given up a No. 2 slot in a huge market for a tinier share of a much smaller market. It is a distant No. 5 in combo devices, with a 4.1% market share world-wide, after Nokia's 57%, SonyEricsson's 11% and smaller slices by Samsung Corp. and Motorola Inc., says IDC.

    Handspring executives don't count it that way. In their scorecard, they are ahead in a new market with a gadget that uniquely combines data and voice functions. Other hand-held makers are coming to the same market too late, they say, while cellphone makers are making pale imitations by simply adding a few data capabilities to their voice devices.

    "It would have been much safer" to just make organizers, says Ms. Dubinsky. "We chose to invest in the future."
  10. #10  
    none of the info in this article is news. We have known for some time that HAND was running short on cash. Actually, the news i had was that they had less than 12 months (like 6 or so), but due to cost reductions they can last 12 i guess.

    I think this is the start of their advertising campaign, lets just hope its good. Front page article w/ picture of treo on front page is a nice start.

    Dont forget that all handheld/pda/communicators are in financial trouble. Sure larger co's have more capital, but how long will managment pour money into a unproven market. there are a lot of question regarding communicators.

    I still think HAND has what it takes, it would be depressing if we had to look forward to product releases from others. communicators would then end up like the pc (no more innovation). HAND is the tech and design leader (but remember, they dont put in what we wont use, they are targeting a specific market right now).
  11. #11  
    AS I noted on a new post, I am trying out a xda form O2 that runs what I understand to be the Micrososft Smarphone system.

    Treo is miles ahead in everything except color screen and memory expansion. If those things get addresses in the next Treo, I'm staying for good.
  12. #12  
    Originally posted by rosswords
    "It would have been much safer" to just make organizers, says Ms. Dubinsky. "We chose to invest in the future."
    My kind of company!
    m00se
    I have never let my schooling interfere with my education.
    -Mark Twain
  13. #13  
    And today's SF Chronicle reports that Handspring has been delisted (Business section).
    Peter Campbell * www.krazy.com
  14. #14  
    No one has ever made a fortune without taking risks. Without a doubt the next generation Treo will be a huge deal for Hand. I do not believe they have to hit a homerun with it, but it has to be at least a double.

    I think the learning curve they've gone through will help immensely. They took the plunge when they had the cash on hand and some profits still from the Visor line. Anyone following their footsteps will be doing so after a couple years of sluggish PDA sales and be trying to establish carrier relationships after Handspring.

    Going forward, Hand needs to make a product that appeals to the mobile professional crowd that is their core audience at a reasonable price point. They have lowered their administrative costs consideribly and moved to a pull manufacturing system (they have an order before making a product now), and they still have the best creative team in the business, so I would hazard that they will put out a very good product in the next gen Treo(s).

    With a good product in hand, they need to hit a critical mass of close carrier relationships. They have 2 in Sprint and Orange already, and I will be very surprised is T-mobile/Deutsch telecom does not join that list soon. These relationships really are the critical success factor for the business.

    Well, enough for now.

    Gargoyle
  15. #15  
    I am sad. Not only because I love my Treo and hope they are well enough to keep coming out with more, but because I bought HAND at around $10!
  16. #16  
    Originally posted by gargoylejps
    They have 2 in Sprint and Orange already, and I will be very surprised is T-mobile/Deutsch telecom does not join that list soon. These relationships really are the critical success factor for the business.

    And T-Mobile International said on today it had shelved plans to introduce a mobile phone powered by Microsoft software.


    "We have decided not to introduce this phone," a T-Mobile spokesman said on the sidelines of a Deutsche Telekom news conference. "For the time being, we are not pursuing this project further."


    T-Mobile announced in February it planned to introduce the Microsoft phone this summer in a move analysts saw as a blow to mobile handset industry leader Nokia (news - web sites).


    But industry sources said the phone software of the world's largest software maker still had "fundamental problems" leading to high failure rates.


    Microsoft was not immediately available to comment.

    This will hopefully help!!
    T750 w/Cingular
    Black Jawbone
  17. #17  
    With respect to Handspring being "delisted" - no, they have not been delisted yet - they have til about August 18th to get their share price up and keep it up above $1 for 10 trading days - otherwise THEN they will be delisted. They can also Reverse Split to avoid delisting, go into the Small Cap NASDAQ (death to the stock), or just let themselves be delisted (into the pinks!).

    With respect to T-Mobile's Microsoft decision it should be remembered (and be fresh in everyone's mind here!) that the TREOs (1) aren't selling because of their price and (2) are less than perfect as far as reliability.

    It may just be that T-Mobile learned DIRECTLY from the TREOs that they should wait.
  18. #18  
    Someone told me that Smartphone that T-Mobile was going ot sell is the same thing as the xda that I ahve been using. If that is the case, it is reaaly not ready to be out as a phone. It is more than a year later than the Treo and far behind in terms of software.
  19. #19  
    Having read that article, I still do not understand what was wrong with Mr. Colligan's idea of sticking around in the unconnected PDA market. They were #2 there. Sure, the profit margin wasn't as good, but I suspect that that Hawkins was mistaken at just how good the profit margin of the communicator market was if he thought that these things would fly off the shelves at $500 a pop. They should have been priced around $300 right from the get-go (and about $150 now) and at that price, I wonder if the profit margin would be better or worse than the margins they were already getting on their Visors. The Treo 90 had/has a popular following and creating a non-cellular version of the Treo with built-in Wi-Fi, and another with Bluetooth would have also been good ideas (especially if they did it 6 months ago when no one else had thumbboard PDAs with Bluetooth or Wi-Fi - now Sony and Palm offer these).

    The other thing that hit me when reading the article was the infamous earnings conference call where Dubinsky announced the end of the Visor. After the uproar that ensued she backtracked and said that she was misunderstood and that they would continue to make them so long as the market was buying them. Was that a lie?

    Scott
  20. pabo's Avatar
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    #20  
    A little history lesson -

    Jeff Hawkins sold the original Palm to US Robotics because he had a choice of keeping his ailing company or letting the Pilot flourish (most of you guys were puppies back then). 3Com got the Pilot only because they bought US Robotics, and it was part of the deal. Not that many years later, the Palm is, by far, the defacto standard for handheld computing.

    At the first Palm Developers Conference (I was a presenter), they ran spoof a video showing of all of Bill Gates' announcements for the "next standard for handheld computers" followed by that device being used as a cheese board. Have you seen the MS Phone, it needs a shoulder strap it's so big.

    My point - Jeff Hawkins might have been wrong on this one, but I doubt it. He might not even be able to hold onto HS, but so what. Don't you think there are 5 or 6 companies out there salivating to get their hands on Hand ?? What Jeff has demonstrated is that he has more desire for his creations to flourish, than to get his name in lights. If this is still his attitude, then this is the right time to buy HS stock. At $.92, it's time to buy a couple thousand shares.
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