Palm Inc, whose shares have fallen 90 percent this year, cut the price of its new m500 handheld computer by 18 percent, about four months after putting the device on sale.
Palm lowered the price to US$329 from US$399, the company Web site said. The company's m505, which features a color screen, remains at US$449. The computers went on sale in late April and early May.
Palm and rivals such as Handspring Inc have cut prices in recent months as sales lag amid the slowing economy. Demand has been weak for Palm's m500 because consumers willing to buy a new computer for several hundred dollars will spend the extra money for the color screen and buy the m505, analysts said.
"It doesn't seem to be moving," said Michael Kim, an analyst with Robertson Stephens, who rates Palm "market perform" and doesn't own shares. "Consumers at the high-end of the handheld market are really price insensitive. They don't care about the US$50 price difference." Palm officials declined to comment.
Palm, which couldn't make enough devices to satisfy demand last year, has been plagued by bloated inventories this year. The company cut prices on its older devices in April as sales slowed just as the company ramped up production.
Palm had a loss of US$392.1 million in its fourth quarter ended in June, including a US$268.9 million charge for writing off excess inventory and parts.
Handspring, which makes devices based on Palm's operating system, last month cut prices on most of its products to spur demand and clear inventory as it prepares to introduce new computers.
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