PalmOne lets some staff go

Handheld maker PalmOne, which recently spun off one company and absorbed another, on Wednesday announced that it is cutting its workforce by about 12 per cent.

About 100 employees are being let go as PalmOne continues to integrate fellow device maker Handspring. Shareholders of PalmOne predecessor Palm approved that merger in October, along with the spin-off of its software unit as PalmSource.

PalmOne faces a declining market for personal digital assistants (PDAs), which have been its mainstay, as buyers increasingly are turning to the newly emerging category of smart phones, which offer both the organiser functions of PDAs and the calling capabilities of mobile phones, among other features.

The company said that it is shifting more investment into smart phone technology and that the layoffs figure into its plan to get out of the red and reach profitability in fiscal 2005. PalmOne reported a second-quarter net loss of $4.1m last month.

"The Handspring acquisition continues to deliver synergies, and tough but strategic decisions coupled with operational discipline enable us to reduce overall spending," PalmOne CEO Todd Bradley said in a statement. "We are committed to delivering growth and profitability, and these actions will move us closer to those goals."

When the layoffs are completed, the company expects to have about 740 employees.

Dinesh C Sharma writes for CNET News.com.