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In a statement the PDA and smartphone maker said that the redundancies will help it to "focus and better align resources behind core initiatives" and "ensure that our expenses are in line with projected revenues".

The company has struggled over the past 12 months, it share price declining by more than 70%, though news of the firings added 6% on a day. The PDA market has collapsed and competitors have eaten into its large share of the US smartphone market. Palm has just warned shareholders that it will make a loss in the current quarter.

It has also been hampered by a five-year-old operating system - Palm OS 5 Garnet

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- and announced recently that its own Linux-based OS is unlikely to be ready until 2009.

Plans to launch a new product, the laptop-style Foleo "smartphone companion" were scrapped just days before it was due to launch, a decision believed to have been strongly influenced by its new chairman, former Apple iPod chief Jon Rubinstein. It did however release a new consumer smartphone, the well received Centro, but even that has not been without problems, with higher than expected warranty costs.

Rubinstein is said to be the instigator of the restructuring, overhauling the development structure and forcing out some executives while promoting talented engineers, much like his former boss Steve Jobs did to great effect when he returned to Apple ten years ago.

Roger McNamee, who joined Palm's board at the same time as Rubinstein, believes the business is heading in the right direction.

"You won't even see it in the numbers for awhile, but the company is off to a great start," he said.