INVESTORS FLIP FOR HANDSPRING.(BUSINESS)

Byline: CLIFF EDWARDS Associated Press

MOUNTAIN VIEW, Calif. -- Handspring Inc.'s stock surged more than 30 percent on the first day of trading after an initial public offering raised $200 million, suggesting investors continue to hold high hopes for the company's Visor and other handheld electronic organizers.

``They've got a device people are clamoring for,'' said analyst Bruce Kasrel at Forrester Research. ``It shows there's definitely a lot of attention being lavished on handhelds despite the recent lovely dotcom exodus (of investors).''

Handspring sold 10 million shares, or an 8 percent stake in the company, for $20 each late Tuesday. That was above the expected range of $17 and $19 per share and gave the company a market valuation of $2.5 billion.

Shares of the Mountain View, Calif.-based company opened at $27 Wednesday and hit a high of $28.25, before closing at $26.938 on the Nasdaq Stock Market.

In comparison, Palm's initial public offering went in early March for $38 a share. Its stock rose to a stratospheric $165 in its first day of trading before plunging, and now trades at slightly more than $27 a share.

Businesses and consumers increasingly are turning to devices such as notebook computers, handhelds and cellular phones to stay connected to the Internet and each other while on the go.

Just Wednesday, a joint government-business project operating out the Massachusetts Institute of Technology was expanded to explore a largely invisible computer network permeating homes, offices, cars and every other place where people live, work and play. A key component of that project would involve the use of handheld devices.

Citing industry statistics, Handspring said in a recent filing with the Securities and Exchange Commission it expects worldwide shipments of handheld computers to grow to 35.5 million by 2003 from just 8.2 million units last year.

The Visor handhelds are very similar to Palms, which is not surprising: Handspring was founded two years ago by Jeff Hawkins and Donna Dubinsky, the people who invented the original Palm Pilot.

Handspring also licenses the operating system from Palm, which means thousands of Palm programs run on Visors.

The Visor's main difference is that it offers an expansion slot that allows ``Springboard'' modules to turn the organizer into everything from an MP3 music player to a bar-code reader or cellular phone.

The investor interest in Handspring could be a blow to Microsoft Corp.'s efforts to dethrone Palm as the preferred operating system for all handhelds going forward, said Tim Bajarin, president of Creative Strategies Inc.

Microsoft, in its third attempt to break into the market for handheld operating systems, this spring released the PocketPC, which runs on a slimmed-down version of its Windows operating system. Critics say the PocketPC is more prone to crashing than Palm's operating system and that the devices are priced too high for volume sales.