Updated from 9:15 a.m.

Palm

(PALM)

was down 8.8% in late afternoon after it announced it was slashing prices on its wireless model PDA. The Palm VIIx will now be $199 with a $100 rebate if buyers sign up for the Palm.Net Internet access service, down from $299.

This morning,

Lehman Brothers

analyst J. To cut Palm's price target to $11 from $25 in response to the rapidly falling prices.

To also sliced the target for Palm's rival,

Handspring

(HAND)

, to $18 from $28. In late afternoon, Handspring was down 4.6%.