Shorts Slap HandHeld

Normally, investors would have little reason to mention tiny HandHeld Entertainment (ZVUE Quote) in the same breath as Internet powerhouse Google (GOOG Quote).

As it turns out, however, the two companies share some family ties -- a fact that isn't lost on HandHeld fans.

By now, the Google story is quite familiar. Two college buddies, Sergey Brin and Larry Page, established the wildly popular Internet search engine and then -- shunning big investment banks -- took the company public through an unusual auction-based initial public offering. They became instant billionaires. Moreover, they made investors everywhere rich, as Google shares rose fivefold in just two-and-a-half years on the market.

Page's older brother, Carl, had by then enjoyed some Internet-related success of his own. He founded eGroups and agreed to sell it in June 2000 to Yahoo! (YHOO Quote) for more than $425 million.

Then Carl Page went on to smaller things. In 2003, he became chief technology officer of HandHeld, a maker of discount downloading devices struggling to compete in a cutthroat world now dominated by Apple's (AAPL Quote) iPod.

Wall Street showed little interest in this particular Page-backed venture. In a strategy often adopted by desperate upstarts, HandHeld went public last year through a reverse merger with a shell company and relied on PIPE deals for capital. PIPEs, or private investments in public equity, typically force cash-strapped companies to sell their shares at a steep discount.