PG&E; Default Would Hurt Handspring

Handspring Inc., a money-losing maker of electronic organizers, said Tuesday that about 3% of its $207 million in cash and short-term investments is in commercial paper of beleaguered California utility PG&E; Corp.

Handspring’s $7 million worth of PG&E; paper matures Tuesday, though redemption might be postponed because of the utility’s financial problems, Handspring said in a regulatory filing. PG&E; and Rosemead-based Edison International, which runs California’s other major utility, last month defaulted on maturing commercial paper amid the state’s energy crisis.

A default or partial redemption would reduce Handspring’s cash balance, the filing with the Securities and Exchange Commission said. Handspring’s problem shows how energy shortages could have a ripple effect as investments once considered ultra-safe backfire. PG&E;’s paper had been top-rated in mid-December.

Handspring officials weren’t immediately available to comment. Commercial paper is unsecured debt maturing in less than nine months. Investors buy commercial paper because it is generally safe and can be turned into cash quickly.

Handspring makes hand-held personal computers based on Palm Inc.’s popular operating system. The Mountain View, Calif.-based company reported a loss of $15.2 million on sales of $115.6 million in the quarter ended Dec. 30.

Handspring shares rose 56 cents to close at $36.75 on Nasdaq.