Rumours are circulating that Palm, one of the pioneers of the smartphone and creator of the WebOS operating system, is up for sale.

According to a report from Bloomberg, Palm is working with Goldman Sachs and Qatalyst Partners in an effort to secure a buyer, with the hope that one will be found within the week.

The 18-year old smartphone company’s stocks soared after the report, jumping almost 10 percent in early trading in Europe.

Shares also climbed strongly at the tail end of last week in the US, although they have dropped 60 percent in 2010.

Pre amble

Despite the critical acclaim for its recent handsets such as the Pre and the highly regarded WebOS mobile operating system, Palm has seen sluggish sales and a muted uptake of its smartphones.

Its latest financial report revealed it has only sold through 43 percent of the 960,000 devices it shipped in Q1 2010.

This has been blamed on a poor choice of launch partner in Sprint Nextel, as well as weak marketing when the handset maker launched on the Verizon Wireless network.

Caught in the WebOS

But while the Pre handset has been superseded in terms of hardware by the likes of the HTC Desire, Motorola Droid and Google Nexus One, the WebOS software is still considered a strong competitor to the likes of the iPhone OS and Android, and should prove an attractive proposition for potential suitors.

Many of the major smartphone manufacturers however were cagey as to whether they will be making a bid for Palm, not surprisingly given the lack of official announcement by the company.

According to unnamed sources for Bloomberg, Dell has already decided not to bid, while other manufacturers like Nokia and Huawai declined to comment when asked their position.

[source: Bloomberg]