Palm announced today that it has reduced its workforce by 19% this month, with about half of those employees being let go yesterday.

During the course of its third fiscal quarter, the company has laid off around 200 workers. Among those let go was Vice President Glenn Cross who ran Palm SG's Sales and Enterprise Business Development in North and South America. After the layoffs, the Milpitas, CA-based company has about 900 workers.

According to the company, the layoffs resulted from the sluggish economy, which has been particularly detrimental to the handheld sector. Gartner Dataquest recently reported that handheld shipments dropped by 9% in 2002 from the previous year. On the bright side, research firm Instat/MDR predicts that handheld sales will increase by over 20% this year.

Earlier in the month, PalmSource, the operating system and software division of Palm, laid off 18% of its workforce in preparation for its planned spin-off sometime in the first half of this year.