Palm also completed or initiated three acquisitions during the quarter.
They are as follows:

-- In February, Palm completed its acquisition of WeSync. The Portland, Ore.-based company was acquired for its group, wireless and web synchronization capabilities;

-- In March, Palm reached a definitive agreement to acquire Extended Systems Inc. to better meet the needs of the corporate chief information officer and further the company's enterprise offerings. The acquisition, which is expected to close in June 2001, is subject to certain approvals, including that of regulators and Extended Systems' stockholders. Extended Systems provides the software infrastructure companies need to manage multivendor, multiplatform mobile solutions; and

-- Concurrent with the launch of the m500 series, Palm acquired peanutpress.com, which includes a web-based storefront featuring approximately 2,000 titles from many of the major U.S. publishing houses. Through this acquisition, Palm also acquired the Peanut Reader, now called the Palm Reader, a leading eBook reader application for Palm OS handheld devices.

Business Outlook
"Palm has recently begun to feel the effects of the deteriorating macro economic environment," Yankowski said, "resulting in a reduced incoming order rate amid signs of what appears to be a sector slowdown. Based on this, we believe that demand is approximately flat to the fourth quarter a year ago in which our revenues were $350 million. At the same time, Palm is going through the most significant product transition in its history, and we currently anticipate volume shipments of the new m500 series in the last month of our fourth quarter. Taking all of this into account, we expect our fiscal fourth quarter 2001 revenues in the range of $300 million to $315 million."