Smartphone maker Palm Inc

, which has not turned a profit in its battles with rivals Apple and RIM, has begun seeking offers for the firm, Bloomberg said, citing three people familiar with the situation.

A spokesman for Palm in Europe declined to comment.

Palm, which makes the Pre and Pixi phones, is working with Goldman Sachs Group Inc and Qatalyst Partners to find a buyer, Bloomberg news agency said.

Frankfurt-listed Palm shares were up 11.2 percent at 4.27 euros at 8:12 a.m. EDT (1112 GMT), after the smartphone maker's stock see-sawed last week on takeover rumors and options market chatter.

In pre-market trading in the United States, Palm shares were up 7.7 percent at $5.56 compared with their previous close of $5.16.

Last year, Palm introduced its WebOS operating system, which won media praise, but failed to impress the buying public. It shipped a total of 960,000 smartphones in the February quarter, but only 408,000 of those were sold to consumers.

Palm last reported annual profit for the fiscal year ending May 2007, of $56 million. It posted an operating loss of $265 million for the year to May 2009.

Palm's limited scale, distribution and weak global brand outside the United States all point to a takeover as the next chapter in the Palm story, said CCS Insight analyst Geoff Blaber.

The company has developed a highly valuable asset in webOS. The challenge for Palm is finding a buyer prepared to pay a premium for an immature platform when many potential suitors have already invested heavily in Android.

Palm has for years been mentioned as a potential takeover target for much larger companies -- such as Lenovo Group <0992.HK>-- hoping to enter or to expand their presence in the mobile market.

Taiwan's Economic Daily News said on Friday HTC Corp <2498.TW>, the world's No.5 smartphone maker had opened discussions about an intent to acquire Palm.

Technology companies Dell Inc and Microsoft Corp , and handset manufacturer Nokia and Motorola Inc have all been named in the past as potential suitors.

(Additional reporting by Sakthi Prasad in Bangalore and Victoria Howley in London; editing by Lincoln Feast, Erica Billingham and Karen Foster)

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