Palm's upmarket Tungsten models

The world's largest maker of handheld computers blamed overall weak business spending on technology for the slump.

Shares in the handheld computer giant lost 10% to $10.43 on the news in New York trade on Monday.

Last Friday, Palm shares fell 11% after it said it had cut about one-fifth of its staff over the past three months.

Palm said sales in the third quarter would come in at about $205m-210m, down from the $292.7m (�186m) reported the year before.

Price cuts

Palm said sales of its more expensive handheld computers, such as the Tungsten T premium handheld, fell in the US.

A price cut on the Tungsten T in early February was not enough to offset the misery.

But Palm also said demand for its cheaper computers was as expected.

Palm also announced on Monday it would set aside about $140 million in its third quarter for a previously announced restructuring of the company.

It will also write down the value of property it owns in San Jose, California because commercial real estate values in Silicon Valley have fallen.