Palm Growth Accelerates

Third Quarter Revenues up by 116% Over Previous Year

Santa Clara, Calif. - March 28, 2000 - Palm, Inc. (Nasdaq: PALM) today reported financial results for its third fiscal quarter, which ended February 25, 2000. Revenues increased to $272.3 million, a 116% increase over the $125.9 million in revenues Palm had for third quarter fiscal 1999. Excluding separation costs of $8.2 million in the current quarter and purchased in-process technology of $2.1 million in the prior year quarter, pro forma net income was $15.5 million, or $0.03 per share, an increase of 78 percent over pro forma net income of $8.7 million, or $0.02 per share for the third quarter of fiscal year 1999. Including the effect of these items, net income for the third quarter of fiscal year 2000 was $11.0 million or $0.02 per share, an increase of 66 percent over net income of $6.6 million, or $0.01 per share, for the third quarter of fiscal year 1999.

In early March, Palm received net proceeds of $1.17 billion from its initial public offering of 26.5 million shares and the concurrent private placements of 5.9 million shares to strategic partners America Online, Motorola and Nokia.

"We are very pleased to announce our strong financial performance on the heels of our initial public offering," said Carl Yankowski, Palm's chief executive officer. "There are three key reasons behind the strength of Palm: the tremendous flexibility and acceptance of the Palm operating system, the fact that as a company we are addressing large, growing and interrelated markets, and our continued focus on delivering the best customer experience."

Revenues of $272.3 million for the third quarter increased by 5% over revenues of $258.6 million for the second fiscal quarter ended November 26, 1999.

Judy Bruner, Palm's chief financial officer, commented, "Our third quarter revenue growth was particularly impressive because this quarter is traditionally our seasonally slowest and has typically been down sequentially from the second quarter."

During the third quarter, Palm introduced several exciting new products and services, including:

• the Palm IIIc™ handheld computer, the industry's smallest, lightest color handheld
• the versatile Palm IIIxe™ handheld for mobile professionals
• an unlimited volume usage plan for the Palm.Net™ service, which allows Palm VII™ handheld users wireless access to Internet content and e-mail for a flat monthly rate

In addition, Palm made several key announcements during the quarter and in recent weeks.

During the quarter Palm demonstrated its technological leadership in wireless communications for handheld computing at the CeBIT conference with a prototype of a Bluetooth-enabled Palm product. With Bluetooth, Palm OS® products will be able to connect with other devices as part of a Palm "personal network", which will allow users to get instant access to personal, public and corporate data between intranets, the Internet, email and mobile devices.

Delivering on Palm's commitment to provide the best of Internet content to Palm users, Palm and Yahoo! announced an agreement to deliver mail and messaging and Yahoo! Internet content services to all Palm series handhelds. With relationships in place with both AOL and Yahoo!, Palm now has Internet leaders streamlining their content and developing tailored applications for our handhelds - giving our customers access to the two largest content providers on the Web.

In February, Palm announced a relationship with Adobe, under which the companies intend to integrate Adobe Portable Document Format (PDF) technologies and the Palm platform, geared towards the growing consumer market for electronic publishing.

Shortly after the close of the quarter, Palm announced relationships with Sun Microsystems, Siebel Systems, and Tivoli that extend the business-to-business solutions available and the ability to support Palm OS handheld solutions as part of an enterprise IT infrastructure. Specifically:

• On February 29, in conjunction with Sun and iPlanet E-Commerce Solutions, a Sun-Netscape Alliance, Palm announced plans to develop an end-to-end solution that will provide global wireless access to enterprise applications and services via Palm OS handhelds. The solution will help enable mobile professionals to access their corporate applications and data more easily and securely. Sun, Palm and iPlanet plan to jointly market the new solution to enterprise and service provider customers worldwide.
• On March 1, Palm and Siebel Systems announced an alliance to jointly market and sell handheld eBusiness solutions. Support for the Palm OS software in Siebel's products will begin with Siebel 2000, which is scheduled for release this spring.
• On March 7, Palm and Tivoli Systems announced an alliance that will provide enterprise IT solutions that refine enterprise management of Palm OS handhelds. As part of this alliance, Tivoli launched the new Tivoli Device Manager for the Palm OS platform.

On March 15, Palm announced the establishment of a wholly owned Japanese subsidiary, Palm Computing K.K., to provide branded sales, marketing and support for handheld computing customers in Japan.

Palm continues to drive technology development for handheld computing products. During the quarter, Palm became a founding member of the Sync ML initiative, along with IBM, Nokia, Motorola and other industry leaders, to drive the future of universal synchronization between mobile devices, regardless of platform or manufacturer.

"Building on our previously announced strategic alliances with companies such as AOL, IBM, Motorola, Nokia, and Sony, we continue to rapidly move forward on our commitment to drive innovation in handheld computing , smartphones, infotainment devices and wireless Internet solutions," Yankowski added.

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Note: Palm will hold a conference call to discuss its third quarter results on March 28 at 2:15 p.m. PST (5:15 p.m. EST). The audio is available on the Web at: http://www.palm.com/company/ and select Investor Relations to join the Webcast.

About Palm, Inc.
Palm, Inc. is the leading provider of personal companion products (IDC, Dec. 1999), including the Palm III™, Palm V™ and Palm VII™ series of handheld computers. The Palm OS platform is the foundation for the industry-leading handheld computers from the company as well as products from its strategic partners such as IBM, QUALCOMM, Franklin Covey, Handspring, TRG and Symbol Technologies. Designed to support the increasingly mobile and geographically dispersed nature of information management, the company's handheld solutions allow people to carry their most critical information in their pockets. For more information, please visit www.palm.com.

This press release includes forward-looking statements, including statements about the agreement with Yahoo! and the associated delivery of mail, messaging and Internet content to Palm handhelds, the relationship with Adobe and the associated integration of Adobe technologies and the Palm platform, the alliance between Palm and Siebel Systems and the associated release of products, the development and marketing with Sun and iPlanet of a solution to provide global wireless access to enterprise applications and services, and the alliance with Tivoli to provide enterprise IT solutions. These statements are subject to risks and uncertainties, which could cause future events to differ materially. These risks and uncertainties include possible development or marketing delays with the products and solutions to be offered through these agreements and alliances, potential defects in the products and solutions to be developed, the acceptance by the market of these products and solutions, and the ability of Palm to successfully work with these other companies and secure the resources necessary to realize the benefits of these agreements and alliances.

Notices: Palm OS is a registered trademark and Palm, Palm.Net, Palm III, Palm IIIc, Palm IIIxe, Palm V and Palm VII are trademarks of Palm, Inc. or its subsidiaries. Other company, product, and service names may be the trademarks or service marks of others.