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Revenue for the fourth quarter of fiscal 2003 was $14.5 million, down from $30.8 million in the third quarter of fiscal 2003 and from $49.0 million in the fourth quarter a year ago. Revenue for the quarter included $10.3 million in communicator sales and $4.2 million in sales of organizers and accessories. On a GAAP accounting basis, net loss for the period totaled $13.0 million, or $0.09 per share as compared to a net loss of $90.4 million, or $0.62 per share in the prior quarter, which included charges for the Sunnyvale lease restructuring of $75.9 million. Excluding the amortization of deferred stock compensation and impairment of intangible assets of $1.5 million, Handspring's non-GAAP net loss for the quarter was $11.5 million, or $0.08 per share as compared to a non-GAAP net loss of $12.8 million, or $0.09 per share in the prior quarter, excluding amortization of deferred stock compensation of $1.7 million and charges for the Sunnyvale lease restructuring of $75.9 million.

As of June 28, 2003, Handspring's unrestricted cash and short-term investments totaled $36.9 million, down $16.3 million sequentially.

For the fiscal year 2003, Handspring's total revenue was $147.3 million, down from $240.7 million in fiscal 2002. On a GAAP accounting basis and including the Sunnyvale lease restructuring, Handspring's fiscal year loss was $131.1 million, or $0.91 per share, compared to a loss of $91.6 million, or $0.71 per share, in fiscal 2002. On a non-GAAP basis excluding the amortization of deferred stock compensation and impairment of intangible assets of $8.5 million and charges for the Sunnyvale lease restructuring of $75.9 million, Handspring's fiscal year net loss was $46.6 million, or $0.32 per share, compared to a net loss of $71.4 million, or $0.56 per share in the prior year, excluding amortization of deferred stock compensation and intangible assets of $20.2 million.

During the quarter, Handspring announced that the boards of directors of Palm, Inc. and Handspring, Inc. unanimously approved a definitive agreement for Palm to acquire Handspring to form a new, stronger market leader in mobile computing and communications. The two companies anticipate the transaction to close in the fall.

Handspring also introduced the design for its new smartphone family, the Treo 600 series. The Treo 600 is an innovative design that combines a fully integrated QWERTY keyboard with a smaller, more phone-like form factor. The sleek design is the result of significant research and development focused on reducing size, maximizing the utility and ease of use of both phone and data functions, and minimizing trade-offs typically found in converged products. All products in the Treo 600 series will combine a world-class phone, a Palm OS 5-based organizer with messaging, email, and web browsing features. Handspring has received initial stocking orders from key carriers and distributors for the Treo 600, which is expected to ship this fall worldwide.

"Our fiscal Q4 was a watershed quarter for Handspring, with two significant strategic announcements: the Palm merger and the Treo 600 introduction. We also took steps to reduce carrier inventory and manage down operating expenses while conserving cash in preparation for the introduction of the Treo 600 this fall," said Donna Dubinsky, chief executive officer. "We believe that by combining Palm's leadership position in handhelds with Handspring's breakthrough Treo product family, we are well positioned for future leadership in mobile computing and communications."

Other highlights of the fourth quarter included:

• Establishing a key partnership with Orange S.A. to bring Treo 600 to Europe
• Bringing the award-winning Treo 270 product line to the AT&T GSM/GPRS network nationwide
• Treo 600 winning Best of Show at CeBit America in New York
• Launching the Treo 270 in Brazil with partner Alldix

FIRST QUARTER FISCAL 2004 BUSINESS OUTLOOK

Handspring's business outlook for the coming quarter will be affected by the following factors:

1. The company expects first shipments of the new Treo 600 late in its fiscal Q1 ending September. Because of the challenges of manufacturing a complex, new product, the total volumes that can be built and shipped for revenue could vary widely. The company's best estimate at this time is that fiscal Q1 revenues will be comparable to the quarter just completed.
2. The company expects to exit the first quarter with significant backlog that will be shippable in fiscal Q2.
3. The company expects gross margins in Q1 will be comparable with gross margins in Q4, and will improve in future quarters as volumes increase.
4. The company does not expect significant revenues in the future from the sale of organizers.
5. The company expects operating expenses in fiscal Q1 to increase from current levels as a result of higher sales and marketing expenses associated with the launch of its new product.

CONFERENCE CALL INFORMATION

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, July 22nd, 2003. The audio replay of the company's Q3 conference call can be accessed via telephone after 4:30 p.m. PDT Tuesday, July 22nd, 2003 until 4:30 p.m. PDT Friday, August 1st, 2003 by calling 402-977-9140 and entering the reservation number 21138381.

ABOUT HANDSPRING

Handspring is a leading innovator in personal communications and handheld computing. The company's products include the Treo wireless communicators and Treo 90 organizer, the Visor expandable handheld computers, and client and server software for fast Web access from handheld devices and mobile phones. Today Handspring sells its products and accessories at www.handspring.com and through select Internet, retail and carrier partners in the United States, Europe, Asia, Australia, New Zealand, Canada, the Middle East and Mexico/Latin America.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding the following: the timing of the completion of the merger of Palm and Handspring; the future product features of the Treo 600 series; the availability of Treo 600 this Fall throughout the world; the potential for the merger of Palm and Handspring to position the combined company for future leadership in mobile computing and communications; the Treo 600's potential emergence as a breakthrough product in the smartphone category; and the company's first fiscal quarter outlook for product shipments, revenue, backlog, gross margins, and operating expenses. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including, without limitation, the following: the approval of the merger by the Palm and Handspring stockholders; the satisfaction of closing conditions relating to the merger, including the receipt of regulatory approvals; the successful integration of Handspring's employees and technologies with those of Palm; Handspring's ability to develop and deliver innovative communicator products that meet carriers' specifications and expected delivery dates; the degree to which wireless carriers will facilitate the successful introduction of Handspring's wireless products; the timing of the build-out of advanced wireless networks and the quality and scope of voice and data service coverage offered by wireless carriers; carrier and end user customer acceptance of and demand for communicators in general and Handspring's products in particular; overall product quality; and the rapid pace of technological change and competitive developments in the handheld computer and wireless communications industries. A detailed discussion of these and other risks and uncertainties is included in Handspring's most recent filings with the Securities and Exchange Commission and in the Form S-4 filed by Palm on July 3, 2003 in connection with the proposed merger of Palm and Handspring. Handspring assumes no obligation to update the forward-looking information contained in this press release.

NOTE: Handspring, the Handspring logo, Treo, the Treo logo, and Visor are trademarks of Handspring, Inc. and may be registered in certain jurisdictions. All other brand names are trademarks of their respective owners.

ADDITIONAL INFORMATION AND WHERE TO FIND IT
On July 3, 2003, in connection with the proposed reorganization transaction involving Palm, PalmSource and Handspring, Palm filed with the SEC a Registration Statement on Form S-4 containing a proxy statement/prospectus. In addition, on July 3, 2003, PalmSource filed with the SEC a Registration Statement on Form S-4 containing a prospectus relating to the distribution of PalmSource shares to the existing stockholders of Palm. Investors and security holders are urged to read these filings because they contain important information about the reorganization transaction described herein. Investors and security holders may obtain free copies of these documents and other documents filed with the Securities and Exchange Commission at the Securities and Exchange Commission's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the Securities and Exchange Commission by Palm by contacting of Palm Investor Relations (877.696.7256 or palm.ir@corp.Palm.com). Investors and security holders may obtain free copies of the documents filed with the Securities and Exchange Commission by Handspring by contacting Handspring Investor Relations (Bill Slakey at 650.230.5000 or bslakey@Handspring.com). Investors and security holders may obtain free copies of the documents filed with the Securities and Exchange Commission by PalmSource by contacting PalmSource Investor Relations (Al Wood at 408.400.3000 or Al.Wood@Palmsource.com).

Palm and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Palm and Handspring in connection with the reorganization transaction described herein. Information regarding the special interests of these directors and executive officers in the reorganization transaction described herein is set forth in the proxy statement/prospectus, which is included in the Registration Statement on Form S-4 filed by Palm with the SEC on July 3, 2003. PalmSource and its directors and executive officers also may be deemed to be participants in the solicitation of proxies from the stockholders of Palm and Handspring in connection with the reorganization transaction described herein. Information regarding the special interests of these directors and executive officers in the reorganization transaction described herein is set forth in the prospectus, which is included in the Registration Statement on Form S-4 filed by PalmSource with the SEC on July 3, 2003. This document is available free of charge at the Securities and Exchange Commission's web site at www.sec.gov and from Palm by contacting Palm Investor Relations (877.696.7256 or palm.ir@corp.Palm.com).

Handspring and its directors and executive officers also may be deemed to be participants in the solicitation of proxies from the stockholders of Handspring and Palm in connection with the reorganization transaction described herein. Information regarding the special interests of these directors and executive officers in the reorganization transaction described herein is set forth in the proxy statement/prospectus, which is included in the Registration Statement on Form S-4 filed by Palm with SEC on July 3, 2003. Additional information regarding these directors and executive officers is also included in Handspring's proxy statement for its 2002 Annual Meeting of Stockholders, which was filed with the Securities and Exchange Commission on or about October 1, 2002. This document is available free of charge at the Securities and Exchange Commission's web site at www.sec.gov and from Handspring by contacting Handspring Investor Relations (Bill Slakey at 650.230.5000 or bslakey@Handspring.com).