The handheld computing start-up will sell 10 million shares to the public, priced between $17 and $19 per share, the week of June 19, according to papers filed today with the Securities and Exchange Commission.
Handspring markets the Visor personal digital assistant, which competes with devices from Palm and those based on Microsoft's Windows CE operating system. The Visor has stood out in the crowded handheld market because of its Springboard expansion slot, which allows customers to easily upgrade their PDAs with cell phone, digital camera and MP3 player add-on cartridges. The devices themselves are typically cheaper than Palm or Microsoft products.
Handspring last week lowered the price of its stock offering, which was initially expected to be priced between $19 and $22 per share. The move was a reaction to April's drop in the stock market and the lackluster Wall Street performance of Palm, which traded as high as $165 on its opening day in February but is now hovering around $25.
Handspring is looking to raise $160 million in the IPO, according to Credit Suisse First Boston, the underwriter of the offering.
But the offering may be dragged down by current market volatility, fierce competition and Handspring's close ties to Palm, analysts say. "It's guilt by association, which is unfortunate for Handspring," said David Menlow, an analyst with IPO Financial Network.
Handspring and Palm, which currently dominates the market for handheld devices with about three-quarters of the market, according to International Data Corp., have a lot in common. Both companies were co-founded by Donna Dubinsky and Jeff Hawkins, and Handspring licenses Palm's operating system for its Visor devices.
Because of the close ties between the two companies, analysts predict Handspring may be hurt by Palm's problems, despite Handspring's attempts to create a diversified revenue stream with its Springboard licensing.
"You are judged by the company you keep and the sector in which you're involved," said Menlow, adding that Handspring may have a more impressive business model than Palm. "I am concerned that the well has been poisoned by Palm."
The timing of the offering could further hurt Handspring, Menlow said, because the IPO market has cooled significantly with the overall downturn in the market. "There is no momentum building in the market right now," he said. "You're not going to see any jackrabbit starts."
Although the market for digital devices such as PDAs, cell phones and MP3 players has never been hotter, that demand has led to shortages of some of the components that go into the devices. Palm, for example, has disclosed that it is having difficulties keeping up with demand because of shortages in LCDs and flash memory. Handspring has said it is not affected by the LCD shortages and does not use flash memory in its products.