Amid rumours that the company could be acquired, Palm has reported that its third-quarter profit was down from $3.3 million (£1.7m) on last year’s quarter despite record handset sales.

Palm recorded $410.5m in revenue thanks to strong sales of its Treo smartphone, up from the $388.5m the company collected for the third quarter of 2006. Palm's revenue also beat the Wall Street estimate of $403.6 million.

But the company's announcement did not mention persistent industry buzz that the company could be acquired, by either Motorola or Nokia. Company leaders forecast a strong fourth quarter, with revenue expected to fall between $400 million and $410 million thanks to continuing global smartphone sales, said company chief executive Ed Colligan.

Asked directly about the acquisition rumours during a conference call with analysts, Palm chief financial officer Andy Brown declined to say anything specific. "There's a lot of rumours and speculation out there, and it's our practice not to comment on that kind of stuff," he said.