Palm Cuts 19% of Jobs, Blames Weak Market

Citing weak market conditions, hand-held computer maker Palm Inc. said Friday that it had cut 19% of its staff, or more than 200 jobs, during the last three months, with the majority of that group let go Thursday.

Palm spokeswoman Marlene Somsak said the most recent cuts occurred at Palm Solutions Group. The overall cuts included a staff reduction announced last month at PalmSource, the company’s software unit. Palm did not give details about locations of the cuts.

Milpitas, Calif.-based Palm now employs about 1,000 people.

Palm dominates the market for hand-held digital organizers. Demand has slowed significantly from a few years ago, with global shipments in 2002 off 9% to 12.1 million units, according to research firm Gartner Inc.

The layoffs come at a critical time for Palm, which plans in coming months to split PalmSource and Palm Solutions. PalmSource, which develops the personal information management software that powers devices made by licensees such as Handspring Inc., Samsung Electronics Co. and Sony Corp., is seen as a source of growth.

Earlier Friday, J.P. Morgan Securities analyst Paul Coster cut his investment rating for Palm to “underweight” from “neutral,” citing reduced demand and “bleak” prospects for a recovery in demand.

Palm shares fell $1.46 to $11.60 on Nasdaq, their lowest point in about four months. They have lost 40% of their value in the last six weeks.