"I think it would be a good thing if they were purchased," said Gartner Inc. analyst Ken Dulaney. "They're doing well now, but they need more capital to do the things they need to do."

The rumors late last week drove up the price of Palm stock. Palm spokeswoman Marlene Somsak said late Monday that the company does not comment on rumors and speculation. "There's new ones every day," she said.

Dulaney said he had no direct knowledge that, as several news stories indicated, Palm was preparing itself for sale. He did say, however, that Palm investors told another Gartner analyst of the preparations.

"The rumor that [Palm] is in play came from investors," Dulaney said. Whether the stories are true, Dulaney said that Palm, which is currently profitable, can't keep up its profitability over the long haul, particularly with its popular Treo line of smart phones starting to show its age.

"Today, the big guys can do new [phone] models every six months," Dulaney said. "Palm just can't do that. The Treo has been out there far too long. Its electronics have been upgraded, but it's just too thick."