Palm shares hit all-time low

The launch of next generation handheld computers has been delayed

Shares in Palm, the leading maker of handheld computers, fell to all-time lows the day after the company slashed its revenue outlook for the fourth quarter and said it was laying off 300 workers, or 15% of its workforce.

The shares slipped $2.02 to $5.03 in active trading on the US Nasdaq market.

Palm had also said it was cancelling its planned purchase of software company Extended Systems, a key deal that the company hoped would help it branch beyond sales to individuals, and on to sales in bulk to companies.

Palm said it had been hurt by a delay in the launch of its new top-end m500 and m505 models and a build-up in stocks of older, cheaper models.

'Shocking'

"The slowing economy and market conditions led both companies to conclude that a termination of merger plans would best serve both companies and their respective shareholders," Palm said in a statement.

The California-based company said it now expected its operating loss in the fourth quarter to be between $170m - $190m (£119 - £133m), more than double its earlier forecast of $80m - $85m.

"I think most people were expecting a big write-off but taking the revenues down another 50% and killing the Extended deal, that was shocking," said one analyst.

Some were speculating that the company might run out of cash by November.