The Mountain View, Calif.-based company, which is offering 10 million common shares, disclosed the lowered price range in a filing today with the Securities and Exchange Commission.
The company said it will make about $166.8 million if the shares are sold for $18 each, after deducting the underwriting commissions. Handspring plans to use the proceeds of the offering for general corporate purposes, including as working capital.
The IPO market has cooled considerably since earlier this year when issues routinely doubled or better from their starting price. Many companies whose IPOs are in the pipeline have lowered their price ranges or postponed their offerings. The number of IPOs is likely to dwindle even further during the slow summer months, analysts said.
Besides a roiled stock market, Handspring also must contend with an industry-wide shortage of flash memory, LCD screens and other components. Although the effect of the shortage has been limited so far, it will effectively put an artificial ceiling on revenue growth over the next few quaraters because manufacturers simply won't have the parts to build products to meet demand. Component shortages could also drive prices for handhelds up in the future, which typically depresses demand.
Competition grows keener as well. Palm, the leader in the handheld market, will revamp its product line later this year to include wireless communications across its product line. Hewlett-Packard and other companies have come out with new handhelds incorporating Microsoft's Pocket PC in recent weeks. Another formidable competitor is Canada's Research in Motion (RIM). Last month, RIM announced the RIM 957 Wireless Handheld, code-named Proton, which is essentially a cross between RIM's BlackBerry email device and a personal digital assistant.
Credit Suisse First Boston, Merrill Lynch, Donaldson Lufkin & Jenrette and U.S. Bancorp Piper Jaffray are managing the Handspring share sale. After the offering, Handspring will have about 125 million common shares outstanding. The company has applied to have its stock listed on the Nasdaq under the symbol "HAND."
Palm, which licenses its software to Handspring and is being fully spun off in July by 3Com, began trading on March 2. The company raised about $942 million from its IPO. Palm shares hit a high of $165 but have tumbled in the past month.
Handspring had a net loss of $40.8 million on revnue of $50.1 million in the first nine months of fiscal 2000, which ended April 1. The company had net losses of $8.4 million with no revenue from July 29, 1998, to June 30, 1999.