HANDSPRING POSTS RECORD REVENUES OF $115.6 MILLION FOR Q2, UP 64% SEQUENTIALLY

HANDSPRING POSTS RECORD REVENUES OF $115.6 MILLION FOR Q2, UP 64% SEQUENTIALLY
MOUNTAIN VIEW, CALIF. (January 16, 2001). (press1: iBOT) - Handspring, Inc. (NASDAQ: HAND) today posted revenues of $115.6 million for the second quarter of fiscal year 2001 which ended December 30, 2000. Quarterly revenues increased 64% over Q1, and over 600% compared to Q2 of last year, reflecting strong holiday demand for Handspring’s Visor line of handheld computers. Continued channel expansion in the U.S. retail market, along with new distribution channels in Asia, also contributed to the strong quarter.

Donna Dubinsky, founder and CEO of Handspring, said, "We are extremely pleased to enjoy such strong customer acceptance of our products, including our two high-end handhelds, the Visor Platinum and the Visor Prism. Moreover, we executed very well in product development and delivery, expanded our distribution worldwide, and supported our developers in delivering more Springboard modules."

Handspring’s gross margins increased to 31.4%, up slightly from the prior quarter. Excluding amortization of deferred stock compensation, Handspring reported a net loss of $7.0 million during Q2. Excluding amortization of deferred stock compensation, total operating expenses were $45.6 million, or 39% of revenue. Including amortization of deferred stock compensation, net loss for the quarter was $15.2 million.

Handspring achieved several significant milestones during the quarter. First, the company started shipping three major new products: VisorPhone, Visor Prism, and Visor Platinum. Second, the company expanded its domestic retail distribution with additional retail partners such as Target and Wal-Mart. Third, Handspring expanded its international presence with new distribution in Asia and the Middle East.

On December 26, 2000 , the company announced a definitive agreement to acquire Bluelark Systems, Inc., developers of a Palm OS Web browser and proxy server that enable fast, high quality Web access from handheld computers. With this acquisition Handspring intends to make Web browsing a core feature of its product offerings moving forward.

In the quarter, many third-party developers announced new Springboard modules, further delivering on the promise of expandability. "We are very happy with the momentum and acceptance of our Springboard platform in the developer community." Dubinsky added. "We continue to see good traction in the number and variety of Springboard modules coming to market, particularly in the communications, content and multimedia space."

Third-party products recently shipping include the Novatel Minstrel S CDPD modem with wireless service from Omnisky, GoAmerica, and YadaYada; Infinity Softworks powerOne graph and powerOne finance modules; Pocket Express Entertainment Pack; Targus Total Recall Digital Voice Recorder; Remote Solutions Memory Access Springboard module; Nexian HandyGPS module; The Lonely Planet CitySync module; and content modules from Franklin Electronic Publishers including the New Merriam –Webster Dictionary, Washington Manual, Harrison’s Principles of Internal Medicine, Holy Bible King James Version, and Handbook of Adverse Drug Interactions modules.

Handspring’s earnings conference call will be webcast on its Web site at www.handspring.com, live at 2 p.m. PDT (Pacific Daylight Time) on Tuesday, January 16, 2001, and archived through Tuesday, January 23, 2001. The audio replay of the company’s Q2 conference call can be accessed via telephone after 4 p.m. PDT Tuesday, January 16, 2001 until 4 p.m. PDT Tuesday, January 23, 2001 by calling (858) 812-6440 and entering the reservation number 17358212.

ABOUT HANDSPRING
Handspring is a leading innovator in the handheld computing industry. The company develops, manufactures and markets a family of expandable handheld computers for a broad range of markets and customers. Founded in 1998, Handspring's flagship technology is the Springboard platform that provides a simple and easy method for hardware and software expansion. Today Handspring sells its Visor line of handheld computers, along with a line of Springboard expansion modules and accessories, at Handspring.com and through select Internet and retail partners in Asia, Canada, Europe, Japan, the Middle East and the United States.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties, including those relating to: Handspring’s plans to make Web browsing a core feature of its future product offerings; the growing momentum and acceptance of the Springboard platform by developers, and the continued traction in the number and variety of Springboard modules coming to market, particularly in the communications, content and multimedia space. Actual results may differ materially due to a number of factors including, among others: Handspring’s ability to integrate Bluelark technology with existing and future Handspring products; consumer acceptance of, and demand for, wireless Internet functionality; the challenge of attracting and retaining Springboard developers given their need for a very large base of Visor users and the distribution channels to reach them; consumer demand for handheld expansion products in general and Springboard modules in particular; and the rapid pace of technological change and competitive developments in the handheld computer and wireless Internet industries. Moreover, the closing of the Bluelark acquisition is subject to the approval by the shareholders of Bluelark and certain other conditions. Reported results should not be considered as an indication of future performance. The matters discussed in this press release also involve risks and uncertainties described in Handspring's most recent Form 10-Q filed with the Securities and Exchange Commission. Handspring assumes no obligation to update the forward-looking information contained in this press release.

Handspring, the Handspring logo, Visor, VisorPhone and Springboard are trademarks of Handspring, Inc. and may be registered in certain jurisdictions. Bluelark is a trademark of Bluelark Systems, Inc. and may be registered in certain jurisdictions. All other brand names are trademarks of their respective owners

Press Contacts:
Volker Jacob
Handspring PR Manager EMEA
+41 22 747 7754
vjacob@handspring.com

Investor Relations:
Brad Driver
Handspring
650-230-5070
bdriver@handspring.com

Sven de Reuter / Daniela Tavares-Lucas
Text 100 Public Relations
Tel: +49 40 43 29 29 46 / 12
Email: svenr@text100-hh.de /
danielal@text100-hh.de