According to a recent C|Net article, Palm is in talks to raise money from strategic investors as it seeks to separate its operating system unit from the part of the company that builds and sells handheld computers.

It is reported that Palm's goal is to split into two separate publicly traded companies by year's end.

Palm has already established PalmSource as a subsidiary and has begun breaking out that unit's financial results. Both units are apparently leaving Palm's current headquarters on 3Com's campus to new, separate locations in Silicon Valley.

Palm has been losing ground both in market share of PDAs and on the stock market. The company recently sought stock holder's approval to conduct a reverse stock split. They hope to make their stock price more attractive to institutional investors. Will this work? Who knows. Stay tuned.