Investment bankers from Morgan Stanley are advising Palm on its options as the maker of the Treo smartphone seeks a buyer, according to several sources familiar with the situation.
Shares of Palm rose 11% on Friday to as high as $18.08, their highest level in eight months, on renewed speculation that leading mobile phone maker Nokia was eyeing the company.
A technology banker, who spoke on condition of anonymity, said on Friday there was potential interest from both strategic and private equity buyers in bidding for Palm, and a separate banking source said the company was up for sale.
But the technology banker said the company's stock run-up made it more challenging for private equity to bid for the company versus strategic bidders, who have more opportunities to cut costs.
On Sunday, a third source told Reuters that Morgan Stanley was advising Palm on its options.
Shares of Palm have vaulted more than 25% this year, boosted by persistent rumors it is a takeover target. The rally has lifted Palm's market capitalization to about $1.7 billion, slightly more than total revenue in its last fiscal year, which ended in May 2006.
Palm has long been seen as as a target. Speculation increased last week when technology news Web site Unstrung said Nokia or a private equity firm may be the leading candidates to buy Palm at around $20 a share, citing unnamed sources.
Motorola , the No. 2 handset maker, has also been mentioned as a potential buyer for Sunnyvale, Calif.-based Palm, which makes personal digital assistants as well as a line of mobile phones that keep track of appointments, data and e-mail.
Morgan Stanley declined comment. Palm was not available for comment.