The layoffs, which occurred Thursday, affected "a small percentage" of Palm's approximately 1,200 employees and were concentrated in the company's development group, according to a company spokesman. They primarily affect Palm employees in the United States, he added.

Palm has seen steady decline in the handheld device market, where it leads the market and is in the midst of financial restructuring. Last week, private equity investors Elevation Partners took a 25 percent stake in Palm, investing US$325 million into the struggling smartphone maker.

The company faces stiff competition in the growing smartphone market, where its Treo line has been a hit.

The Palm spokesman said the reorganization was in the works prior to the Elevation investment and that the company is still hiring staff in other areas. "We're flattening our organizational hierarchy and doing some realignment," he said.

He would not say exactly how many employees were being laid off.