Acer to buy Gateway
Some of the deal-making may be off, especially in the hard-hit financial sector in the US and in the private equity realm, but there are still strategic buys out there, especially for companies with cash. In fact, the bargains will be better as the leveraged buyers have been knocked out of most auctions.
This week Taiwan-based PC maker Acer announced it would buy US-based Gateway Computers in a $710 million deal. The purchase would maker Acer the #3 PC maker in the world (after HP and Dell), and slip it ahead of China-based rival Lenovo, the buyer of IBM's PC business a few years back.
The move will double Acer's market share in the US, where it currently has a little over 5%,, and in Europe, where it will take over the Dutch-based Packard Bell line, in which Gateway has the right of first refusal. In fact, Lenovo had been targeting Packard Bell. Still once-mighty Gateway has declined in recent years, so it will be hard work regaining market share from the two big US PC companies.
The PC market is growing at 12% a year. In fact, trends are favoring Acer, as they have favored HP, at the expense of Dell, thanks to an increase of interest in laptop rather than desktop PCs and a related move towards retail rather than online buying as users want to test-drive their new laptops., As an Economist article ("Personal computers: There's life in the old dog yet",. 8/30/07) puts it "No less surprisingly, Acer is similarly well placed [like HP] having staged one of the more stunning turnarounds in the PC industry after an ill-fated attempt to enter the American market in the 1990s. Like HP, it sells through retail and has put an emphasis on design and marketing."
Acer may try to push itself in US retail stores as the alternative to HP. Gateway acquired US rival eMachines in 2004. The field for viable PC sellers in the US (not counting Apple) has now shrunk to about five, with Toshiba, the #5 in the world, with a smaller share.
9:29:27 PM 
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