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Palm unveils new color handhelds

In a move aimed to show it still has a bright future, the handheld maker announces two new color models.

In a move aimed to show it still has a bright future, Palm on Sunday announced two new color handhelds.

As previously reported, the m515 is an incremental improvement to the top-of-the-line m505, adding more memory and a brighter screen. The m130 is a new midrange color model similar to the m125, but with a 16-bit color screen.

At $279, the m130 is one of the least expensive color-screen handhelds on the market, with Handspring's aging Visor Prism model being the nearest Palm OS-based competitor. Like the m125, the unit has a Secure Digital expansion slot and universal connector.

The $399 m515 offers the added features for the same price as the m505, which was introduced last spring.

In addition to boosting the memory to 16MB, the m515 has adjustable backlighting and contrast, addressing a key criticism of the m505.

Palm also dropped the price of the black-and-white m500 to $299 from $329.

The company recently released its i705 wireless device and is also splitting its hardware and operating system businesses.

The new products and organizational changes are part of the company's effort to rebound from a brutal 2001 in which it suffered through an inventory glut, price war and hefty losses.

J.P. Morgan analyst Paul Coster said the two new products are incremental improvements to Palm's line. Coster said the backlighting on the m505 was not bright enough, while the m130 provides a lower-priced color option.

"We think Palm is better diversified than Handspring" and Research In Motion, Coster said in a note to his clients. "We believe this news will help the stock today. We also consider Palm undervalued at this level."

Palm's stock on Monday closed at $3.16, up 17 cents, or 5.7 percent.