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Real estate glut to dent Handspring

The company warns it will take a cash hit due to pricey office space it no longer needs, becoming the latest high-tech company to make such a pronouncement.

Handspring warned Friday that it will take a cash hit because it signed a lease for pricey real estate that it no longer needs, becoming the latest in a string of high-tech companies to make such a pronouncement.

The handheld and smartphone maker, which this week said it plans to lay off 20 percent of its staff, said in a regulatory filing that it is looking to sublease space in one or both buildings it has rented in Sunnyvale, Calif. The company is also trying to negotiate a buy-out of its lease obligations.

"As a result of either subleasing the buildings, or a buy-out or restructuring of the leases, we anticipate taking a significant, one-time charge relating to these buildings in the December quarter of fiscal 2003," Handspring said in a filing with the Securities and Exchange Commission. "Moreover, in either case, the resulting expense will be substantial and will adversely affect our cash resources."

Even if it does find someone to lease the property, Handspring expects it will still be losing money on the deal, since it will have to lease the space out at a price lower than what it must pay. The company said it has enough space in its current Mountain View, Calif., headquarters.

Sun Microsystems and Palm have had similar problems in the recent past.