Page last updated at 13:37 GMT, Tuesday, 13 April 2010 14:37 UK

Smartphone maker Palm up for sale

A Palm Pre Plus
The Palm Pre was dubbed an 'iPhone killer'

Handheld device maker Palm is in the market for a buyer, as sales of its latest smartphones fail to catch up rivals such as Apple and BlackBerry.

Palm was a trailblazer for handheld devices but its latest offerings, the Palm Pre and the Pixi, have not sold as well as hoped.

Computer firms such as Dell and HP could be among potential bidders.

It could provide them with a quick way into the mobile market, said Ovum analyst Tony Cripps.

"There has been a lot of speculation about firms like Nokia buying Palm but I don't think that is an obvious fit. I'd look to the HPs or Dells of this world as both have mobile ambitions," he said.

According to the Reuters news agency, Palm hired bankers last week to explore options for the firm, including a sale of the company.

The Palm Pre was launched last year to much hype and was seen as a potential 'iPhone killer' but sales figures have been disappointing.

Its webOS operating system was praised for its functionality and usability.

But it is the enduring Palm brand that will really interest buyers, Mr Cripps thinks.

"Palm's webOS has only been in the market for a short time and is somewhat unproven but there is a residue of fondness for Palm as a brand, especially in the US," said Mr Cripps.

Geoff Blabler, an analyst at research firm CCS Insight believes the operating system is a big asset for Palm but is not sure that it alone can sell the company to potential bidders.

"The challenge for Palm is finding a buyer prepared to pay a premium given the abundance of alternative platforms and widespread adoption of Android," he said

In the past six months, the company's stock has dropped 69%. It has a stock market value of $870m (£563m).

Palm's shares rose more than 17% on the reports of a possible sale.

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