The troubled US smartphones company Palm has put itself up for sale as it struggles to compete with the popularity of Apple's iPhone and the ubiquitous BlackBerry.

The pioneer in developing hi-tech handheld organisers has called in Goldman Sachs and San Francisco-based Qatalyst Partners to look for a buyer and is seeking bids this week, according to a report by Bloomberg News that sent the company's much maligned shares up by 17%.

The move follows disappointing sales of Palm's latest range of Pre and Pixi smartphones, which reached shops last year. Events are likely to be closely watched by the U2 rock star Bono, whose investment firm Elevation Partners pumped $460m (£300m) into Palm in 2007 and 2008, giving it a stake of roughly 30%.

Founded in 1992 by neurologist Jeff Hawkins, Palm shot to prominence with its Palm Pilot devices, which allowed users to write on a screen using an electronic pen using a simplified graffiti language. Initially simply electronic diaries and address books, Palm's products evolved to incorporate phones and web browsers. On its flotation in 2000, Palm's market value rocketed to an astonishing $53bn, exceeding the likes of McDonald's and General Motors.

In recent years, Palm has struggled to find the marketing punch to land blows on bigger players such as Apple and Research in Motion. Experts say US mobile phone partners failed to push Palm products particularly heavily to the public, despite decent reviews in the technology press.

"The problem is they just don't have enough in the way of resources," said Charles Wolf, a technology analyst at stockbroker Needham & Co. "It's unfortunate because the company has reasonably good products."

Palm's WebOS operating system is considered the company's most valuable asset. Rumoured buyers include hardware firms such as Taiwan's HTC and the China's Lenovo. Wolf suggested interest could also come from Nokia or RIM, who could view Palm's easy-to-use software as attractive in competing with the iPhone and with Android, which powers Google's phones: "Palm's software is in the same class as the iPhone and Android."

Palm declined to comment. Its chief executive, Jon Rubinstein, acknowledged last month that its performance had been "very disappointing" following a net loss of $18.5m for the three months to February. Palm's shares, which were changing hands for $13 in January, perked up by 87 cents to $6.03 during early trading today, giving it a market capitalisation of just over $1bn.

The company has proved a disappointment for Elevation Partners, co-founded by Bono, which specialises in new media and entertainment and bet on a revival of Palm's fortunes. Elevation began investing when Palm's stock was at $8.50, though the firm's injection of funds into Palm has been largely in return for convertible preference shares with a degree of protection against losses.