Advertisement
YOU ARE HERE: LAT HomeCollections

California

Handspring Drops Target Price for IPO

Stocks: Turmoil in tech sector persuades maker of hand held computers to drop shares from $20.50 to $18.

May 31, 2000|MICHAEL LIEDTKE | ASSOCIATED PRESS

SAN FRANCISCO — Handspring Inc. slashed the expected price of its initial public offering by $25 million Tuesday in the latest fallout from the tumbling market for technology stocks.

Analysts said the Mountain View, Calif.-based company's decision to lower its target IPO price from $20.50 to $18 a share shows just how frosty the market has become for once-hot tech stocks.

"The IPO market is on very fragile ground right now," said Gail Bronson, senior analyst for IPO Monitor in Palo Alto. "Even good companies like Handspring are being punished in this environment."

Handspring's offering of 10 million shares is expected to be sold during the week of June 12.

At the time the company filed its IPO plans in late March, Handspring's stock looked like a potential highflier.

The company makes Visor, a personal organizer that's challenging the Palm Inc. line in the rapidly growing market for hand-held computing devices. Handspring is also run by two highly regarded executives, Donna Dubinsky and Jeffrey Hawkins, who developed the Palm Pilot before leaving to start their rival firm.

Since Handspring's March 31 filing, the climate for tech stocks has cooled dramatically. Since the end of March, the technology-driven Nasdaq Composite Index has plunged by 24%, making it more difficult for tech-oriented IPOs to find buyers. A total of 53 companies have withdrawn or postponed their IPOs so far in the second quarter, compared with 21 during the entire first quarter, according to IPO.com.

Many of the IPO postponements and withdrawals have occurred in the Silicon Valley, where the region's economy has been propelled by the rising stock prices of tech companies. Since mid-April, 11 Bay Area tech companies have postponed or withdrawn IPOs totaling $892 million.

Handspring's IPO also has been tainted by the poor stock showing of rival Palm. After Santa Clara, Calif.-based Palm priced its March 1 IPO at $38 a share, the stock soared to $165 before collapsing. Palm's stock closed at $24, up $2.63 on Nasdaq amid Tuesday's market rally.

Like most young tech companies, Handspring is sustaining major losses, another factor working against its IPO. Through the nine-month period ended April 1, Handspring lost $40.8 million on sales of $50 million.

"The market is looking at IPOs in a very cold and calculating way," said David Menlow, president of IPO Financial.com, a Millburn, N.J., firm that tracks IPOs. "The market doesn't want to fund companies that continue to lose money ad nauseam."

Advertisement
Los Angeles Times Articles
|
|
|