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Acer-Gateway deal is valued at $710 million USD

There is big news out of the computer world today. Acer today announced that it has reached a definitive agreement to purchase U.S.-based Gateway, Inc. Gateway is currently ranked as the fourth largest PC manufacturer in the U.S. with shipments of over 20 million PCs per year.

The acquisition is estimated to be valued at $710 million USD ($1.90 per share) and is expected to be finalized in December 2007.

"This strategic transaction is an important milestone in Acer's long history" said Acer chairman J.T. Wang. "The acquisition of Gateway and its strong brand immediately completes Acer's global footprint, by strengthening our US presence. This will be an excellent addition to Acer's already strong positions in Europe and Asia.  Upon acquiring Gateway, we will further solidify our position as number three PC vendor globally."

"Joining with Acer will enable us to bring even more value to the consumer segments we serve and capitalize on Acer's highly regarded supply chain operations and global reach to expand the scope of the Gateway and eMachines brands around the world," remarked Gateway CEO Ed Coleman.  "Acer has made impressive strides in the global PC market and the board and I welcome this merger."

From statements made by representatives for both companies, it appears that the eMachines brand -- which Gateway acquired 2004 for roughly $262 million USD -- and Gateway brand will live on under Acer's massive wings. The retention of the brands also means that Gateway will likely continue to flaunt its "cow heritage" much like the Chick-fil-A restaurant chain.

Almost exactly one year ago, it was reported that John Hui offered $450 million USD to purchase Gateway's retail division. The bid, however, was never accepted by Gateway. "I am very disappointed that Gateway has chosen not to constructively engage in discussions with me and my advisors on the proposal that I sent to you on Aug. 3," said Hui in August, 2006. "I believe that management and the board need to adopt a sense of urgency to address Gateway's problems."

The news of Acer’s acquisition comes just weeks after Gateway’s announcement that it would enter the Chinese PC market with desktop and notebook computers.



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is it just me...
By porkpie on 8/27/2007 10:06:13 AM , Rating: 1
or is Acer the worst of the "well known" PC brands?




RE: is it just me...
By stromgald on 8/27/2007 12:04:28 PM , Rating: 1
Yeah, this is a sad end to a fairly reputable computer brand. I think Gateway tried to be too much. They started out similar to Dell, but tried to maintain an Apple-esque exclusivity to their brand. And now, they're being bought out by one of the most shunned large name brands out there.

I have heard that Acer has been improving, but I haven't worked up the courage to get anything of theirs yet.


RE: is it just me...
By Chadder007 on 8/27/2007 12:57:58 PM , Rating: 1
They do make some great LCD monitors. We use them a lot here at my work and they have been great. Just don't have any experience with their PCs.


RE: is it just me...
By FITCamaro on 8/27/07, Rating: -1
RE: is it just me...
By Samus on 8/27/07, Rating: -1
RE: is it just me...
By Misty Dingos on 8/27/2007 1:00:02 PM , Rating: 2
First PC I bought was an Acer full tower Pentium 90mhz back in 95. I have built all the rest of my desktops since then but I could not complain about that PC. Where they went from 1995 I don't know. But anything has got to be better for Gateway than bottom feeding in the PC market. Perhaps two bottom feeders can make one middle of the road company?


RE: is it just me...
By xeltor on 8/27/2007 1:13:34 PM , Rating: 2
I'm not quite sure where you guys are coming from. I have always had good experiences with acer and poor ones with gateway. Though of all the computer manufacturers Dell has to be the one I've had the most troubles with.


RE: is it just me...
By Vanilla Thunder on 8/27/2007 3:36:43 PM , Rating: 2
I bought an Acer desktop for my gf a couple weeks ago. She didn't need anything high-end, just something to surf the web, play some music/dvd's, and do some home photo editing/printing. (And decent enough for me to load some last gen games onto.) I ended up with an AMD X24800+, 2 GB of DDR2, a 500GB HD, DVD-RW, 13 in 1 card reader, canon photo printer, and a 19" 5ms, 2000:1, widescreen monitor. Also included were mouse/kybd/spkrs and a copy of Vista Home Premium. All of this for around $650. Granted, there is no way you would mistake this for a premium system (the case and keyboard are prime examples) it is more than enough machine for the money from a B&M store. Compared to similarly priced HP's and Dells, you can't touch it. But to be honest, I've owned both, and rather than deal with them again, I thought I would give the Acer a run for it's money. So far, so good. Based on the short experience I've had with this one, I'd give them my money again. BTW, the monitor is SWEET.

Vanilla


RE: is it just me...
By AmbroseAthan on 8/27/2007 1:27:20 PM , Rating: 3
To add some support to Acer... I bought an Acer Ferrari 3200 a few years back, and it was great. Harddrive died on after a while (my Dell desktops' have died multiple times) and Acer overnighted me a new hardrive with another box to send my old one back in; this was after spending only 10 minutes on the phone with an English speaking American in Texas.

I also now have a 24" Acer WUXGA screen that I love to no end.


RE: is it just me...
By Le Québécois on 8/27/2007 3:04:08 PM , Rating: 2
Have you ever opened the case of a well known brand computer?

I did so with almost every brand on the market, except for Dell, and Acer computers were always build with what seems to be quality hardware. I can't say the same for other brands like HP for example.

While I would never buy one of those for myself I do recommend them for person that don't know a thing about computers and want to buy a computer at a big store like BestBuy for example.


RE: is it just me...
By TomZ on 8/27/07, Rating: -1
RE: is it just me...
By Le Québécois on 8/27/2007 7:40:38 PM , Rating: 2
Well, I did study in Electric engineering so yes I can in fact see when some components are poorly build.

But more to the point, if you know which brand can be trusted, what are their good and bad products and that you can see them in a computer like an Acer for example. I do thing it's more trust worthy then when you don't recognize the hardware inside or worst, when you know it's a really bad product or brand.

With that in mind, I can say that I trust Acer more than any pre-build computer on the the market(except for Dell because like I said in my previous post, I never opened one of their computer).


RE: is it just me...
By TomZ on 8/28/2007 12:43:24 AM , Rating: 2
quote:
Well, I did study in Electric engineering so yes I can in fact see when some components are poorly build.

Really, so you are trained to spot a failed diode, solder bridge underneath a BGA, a broken trace in an internal layer of a PCB?

Sorry, I'm just having a little fun at your expense. :o)

Quality is an attribute of a process, not of a product. I agree with you that quality tends to be somewhat consistent within a brand, however, these days its more of a crap shoot. A given brand may have a number of ODMs/CMs scattered around the globe, each of which with different quality characteristics.


RE: is it just me...
By glitchc on 8/28/2007 1:16:41 AM , Rating: 2
Cut the guy a break here. It's not like Acer or Dell or anybody else builds their own motherboards from scratch. They're usually bought from third-party OEMs. Hence, the quality of the component depends on the reputation of the OEM, not necessarily the reputation of the assembler. A lot of the chipsets, ex. Centrino, are proprietary and come directly from Intel anyhow.

For the record, I do own an Acer laptop. Bought refurb, came with a one-year warranty from Acer. Has given me excellent service without a hitch for over a year now. The HPs on the other hand, I've seen fall apart in my friends' hands.


RE: is it just me...
By Le Québécois on 8/28/2007 1:47:19 AM , Rating: 2
quote:
Really, so you are trained to spot a failed diode, solder bridge underneath a BGA, a broken trace in an internal layer of a PCB?


Well, I used to be. In fact it was the topic for one of my technical course. How to spot failing electronics pieces and be able to precisely diagnose why a component was defect. But believe me, it's really a big waste of time since it's a lot cheaper to just change the damn component, not fix it.

But it was a long time ago and I usually don't bring a good voltmeter and oscilloscope with me when I go computer shopping :P .

quote:
Sorry, I'm just having a little fun at your expense. :o)


So we're both having fun now!

I'm just entertaining you when I answer those questions because we both know that my knowledge in engineering isn't really useful when you just try to find a good computer for your grand-mother ;). In fact I know a lot of Electric engineers that don't know much on computer beside how to start their computers.


RE: is it just me...
By Belard on 8/27/2007 4:04:14 PM , Rating: 2
"or is Acer the worst of the "well known" PC brands?"

Acer has been in business for a very long time, before they left the USA Retail market, they were a higher-end PC company. When they returned a year or so ago, they aimed for the low-price market.

I've helped people buy Acer computers, they are easy to convert to XP since ACER has easy access drivers of both XP & Vista available. When I worked on the PC, the metal was a tad cheaper than HP,Dell etc - but the space and drive options were better. The motherboard is fine. The other parts like CPU, HDs, RAM and optical drives are the same stuff you find in any quality computer.

If you're buying a NAME-BRAND computer - they are ALL THE SAME... the same level of junk... as I always say. Get whatever is the best deal and "looks" that you like. And since they are the same, spending more than $600 on a Name-brand PC is a waste of money. Only true-high end PCs really make use of faster CPUs. You can blow $1200 on an HP top-end system and it'll have slow 533mhz RAM and maybe a 7600gs card (usually worse).

Acer has been making parts for other companies for decades. They have always been bigger than Gateway (I think).


RE: is it just me...
By spluurfg on 8/27/2007 5:08:58 PM , Rating: 2
Yeah... Acer believe it or not is/was the parent company of Ali (Acer Labs Inc) and AOpen (Acer Open), as well as BenQ (the mobile division was sold off to Siemens). They do a lot of peripherals and I believe OEM for 3rd parties. They're also very big in Taiwan, one of the large computer manufacturers out there, I believe.

I also have personal experience with several Acer notebooks, including tablets, all of which were of acceptable quality.

Note that pretty much every Tier1 manufacturer out there will contract the big component makers (often many different ones) in Taiwan to manufacture their components... Asus being the largest, currently used by Dell and many others I am sure.


RE: is it just me...
By Mitch101 on 8/27/2007 5:02:21 PM , Rating: 2
Acer in the last couple of years has made a tremendous comeback in quality. I think you are referring to ACER of about 15 years ago when cases used to bend just pressing the power button but they are much better now.

ACER I seriously trust again and interestingly enough watch out for Westinghouse as becoming a bigger player in the computer field. Winds are changing.


RE: is it just me...
By BillyBatson on 8/28/2007 6:03:37 AM , Rating: 1
From what I have known they were always very good. I remember in the pentium MMX days up until Pentrium 2 they were pretty big and pretty high end, back when you could still find NEC and Packard Bell desktops in places like Sears and Circuit City. They left the US and when they came back a short time ago they came back aiming for more low cost business but the quality goes along with the price (look at dell, dell $600 range is cheap, XPS bumps you to better quality (which was not evident from my m1330), and alienware bumps you up further but also reflects in the price).

Last I heard Acer was big in Europe?


RE: is it just me...
By selfexiled on 8/29/2007 12:59:07 PM , Rating: 2
I remember having a good experience before back around 1996. I had a 133 Pentium with the 32 MB of EDO RAM. That Acer lasted pretty well, and survived the windows 98 SE upgrade. Looking back I'm fairly impressed that they had a nearly full range of accessories and products at the time (this was before Dell rose to prominence).

I know they left the market some time after that...but everyone I know who has bought an Acer notebook recently has had a fairly good experience. I was convinced that they hold a lower market share due to lack of name recognition rather than quality issues.

In fact, until these comments I was fairly sure that Acer had mainly Mid-Range systems and less of the "craputer" status that E-Machines/Compaq/Gateway held in their hey-days.

PS can anyone attest to the lack of "bloat-ware" in Acer systems? Compared to say...an HP system (which contains an insane amount, esp in laptops)


Wow..
By Araxen on 8/27/2007 9:33:40 AM , Rating: 2
I remember when Gateway PC's were really really popular. How the mighty have fallen!




RE: Wow..
By AmberClad on 8/27/2007 9:43:43 AM , Rating: 2
Whatever did happen to Gateway, I wonder. They seemed to be one of the top PC builders and the cow motif seemed to be everywhere in the mid-90s. Then Dell came out of nowhere.

I kind of wonder if it was partly due to Gateway being slower to get rid of the tired beige-box designs, and adopt the more modern silver/black color schemes that Dell and HP-Compaq moved over to. Also, both of those two companies have other major product lines too, like LCDs and printers.


RE: Wow..
By SexyK on 8/27/2007 9:43:48 AM , Rating: 3
I remember when Gateway was Gateway 2000... that naming scheme sorta went out of style with the 1900's though. At least they are keeping the cows!


RE: Wow..
By AmberClad on 8/27/2007 9:49:29 AM , Rating: 2
I actually haven't seen much of the cows lately (or any Gateway advertising for that matter). Maybe they do need to work on reinforcing the brand image. Animal mascots can work great (Aflac, Geico, Linux, etc).


RE: Wow..
By euclidean on 8/27/2007 12:59:33 PM , Rating: 1
More like it was due to everyone finding out they used recycled parts and tried playing them off as new...that and Dell coming out pretty much sent them packing....then the Emachine era that I thought destroyed the name....though they came back pretty strong the last couple years...great laptops. I wonder how they'll hold up now...


RE: Wow..
By 440sixpack on 8/27/2007 6:36:46 PM , Rating: 2
Yep, my first PC in 1994 was a Gateway 2000 486DX2-66, and my second was a Gateway PIII-550 in 1999. Don't buy premade ones anymore but I always enjoyed the cow theme, adds a little whimsy to an often times far too serious business.


RE: Wow..
By Visual on 8/27/2007 9:44:49 AM , Rating: 2
yes and they even had shops in off-this-world places such as my county...
i've always been very annoyed by the fact they went usa-only a few years back. they are currently the only manufacturers of decent tablet convertibles (read: with decent dedicated graphics) and i want one so badly and can't have it here.
besides the asian market, i hear they recently reentered some country in eastern europe, but not sure which - not mine anyway. but that rumor gave me hope for the future...

i wonder if acer will make them more accessible here now. acer craptops are all over our market.


RE: Wow..
By ObscureCaucasian on 8/27/2007 12:40:56 PM , Rating: 2
They seem to go back and forth a lot.

Gateway 2000 (heh) used to be popular in the 90s, but Dell stole a lot of sales from everybody. I really think Dell needs to start selling in retail stores like HP does. Dell does seem to give the best academic discounts because they are about all I see in classrooms these days.


RE: Wow..
By thecoolnessrune on 8/27/2007 3:42:39 PM , Rating: 2
Umm.. Dell does sell in retail stores now..

Additionally, I love my old 350Mhz PII Gateway 2000. Most durable computer I had ever owned.


RE: Wow..
By tjr508 on 8/27/2007 10:27:51 PM , Rating: 2
I got an uncle that still looks at the internets with an old Gateway PP-180, 64 edo ram, 8mb video, and 3 gig HD.


RE: Wow..
By Rampage on 8/28/2007 12:41:42 AM , Rating: 2
Kudos to your uncle, he must know what he's doing contrary to most people (even people reading this site).

You can do what he's doing if you keep up with proper maintenance (Spybot and some antivirus), keep it running clean and don't fill it up.

Might be stuck on Windows 95 but whats the difference if you aren't gaming. 95 and 98 could be very stable if you had decent hardware.

It's easy to build a new PC every year. Some people even while doing that STILL can't keep a PC working.


The future is coming!
By DeepBlue1975 on 8/27/2007 9:56:35 AM , Rating: 2
Yeah, that future where all we'll have will be a single couple of monster companies that will be at the same time OEMs / CPU / VGA / motherboard / home appliances / car / furniture / avionics / burger makers throughout the whole world.
Competition by then will mean a one on one dispute, and the winner will have enough power to change antitrust laws and buy the looser.

The good thing about that is that the question "where do you work?" will turn into "Do you work at Godlike Corp. 1 or at God Corp. 2?




RE: The future is coming!
By Misty Dingos on 8/27/2007 10:51:08 AM , Rating: 2
BTDT (Been There Done That)

Mega-corps are the boogey men of the 21st century. Corporations that have so much power they are defacto governments. But like so many of the boogey men of the past they are and are likely to remain nothing but stories to frighten the children at night.
When the US (and I am certain other countries) broke up the monopolies of the 19th century it was to ensure that the abuses that occurred then would not occur again. Even everyone’s favorite monster MicroSoft operates under such scrutiny that even if it tried to start pushing any government around it would soon find that being broken up. And being broken up is simple and effective way for the consumer (through the government and courts) to exact retribution.

I don’t fear the mega-corp because they just aren’t going to be a reality. At least not in the Sci-Fi fan’s or corporate conspiracies freaks form.


RE: The future is coming!
By stromgald on 8/27/2007 12:01:18 PM , Rating: 2
Ditto, I think all the Microsoft monopoly hate is overblown. Because of their business, they really can't exert that much influence over their suppliers and customers could turn to Apple, Linux, etc (albeit unlikely). Despite the escalating price of operating systems, they haven't really been abusing their power.

I'm more worried about Wal-mart and their business practices in influencing industries higher along their supply chain than Microsoft. Microsoft is just a more high profile case and people like to jump on them all the time.


By ObscureCaucasian on 8/27/2007 12:45:58 PM , Rating: 2
The nature of the OS business makes monopolies better for the consumer in some aspects. Compatibility was much easier with one OS, as was problem solving. With technology these days software is progressing towards being platform independent. Microsoft has actually been helping out a ton is this aspect with their .NET technologies. Sure they haven't released a framework for Mac or *nix, but how much help do you want them to give the competition. Projects like Mono won't advance as fast as a MS one, but 5 or 10 years down the road, many programs will run independent of platform.


RE: The future is coming!
By TomZ on 8/28/2007 12:46:07 AM , Rating: 1
quote:
Despite the escalating price of operating systems, they haven't really been abusing their power.

The price of Windows has actually remained quite constant for the past 10 years or so. This supports your argument a little more.


RE: The future is coming!
By marvdmartian on 8/27/2007 11:12:33 AM , Rating: 2
Yeah.....like in Demolition Man, where every restaurant is....... TACO BELL!!! LOL


RE: The future is coming!
By vhx on 8/27/2007 2:36:04 PM , Rating: 2
Just wait for the real world Umbrella Corporation. That'll be interesting.


CHINA?
By 16nm on 8/27/2007 12:15:25 PM , Rating: 1
quote:
Gateway’s announcement that it would enter the Chinese PC market with desktop and notebook computers


Can the Chinese even afford to buy computers??? They can only afford $2 for Windows XP. How much is the hardware going to cost, $4??? How much money is there to be made in that market?




RE: CHINA?
By Loc13 on 8/27/2007 3:43:53 PM , Rating: 2
Yes they can. If they don't have the hardware, how do they play the $2 software? Just think about all those WOW players from China!!

I just recently purchased a budget line Acer 24inch monitor. Can't say they're great compared to the Dell I use at work, but it's excellent for the price.


RE: CHINA?
By Yongsta on 8/30/2007 2:56:49 PM , Rating: 2
20% of china population (1.3 billion) is "middle class" average salary of $40,000 US so I would say yes. And that figure is only going to increase.


RE: CHINA?
By Yongsta on 8/30/2007 3:02:12 PM , Rating: 2
I'm getting my statistics from Chinese Academy of Social Sciences (CASS). Also in 10 years estimates of up to 50% of china's population will be "middle class". So that's whats intriguing for businesses, 650 million people with a lot of purchasing power. As for Acer, I bought an Acer AL2051W LCD monitor and it is great. I had an Acer notebook and PC before (10 years ago) and had no problems.


RE: CHINA?
By Yongsta on 8/30/2007 3:05:36 PM , Rating: 2
It would be nice to have an edit function. I just read CASS determination of middle class is at least annual income of $10,000 and own assets at least worth $40,000.


DOESN'T $710 M SEEM A BIT, UUHHH, PALTRY?
By 1078feba on 8/27/2007 9:47:45 AM , Rating: 1
Considering that ATI went for approx 3 times that amount?




By ajfink on 8/27/2007 10:00:03 AM , Rating: 2
Do YOU have $710M? No? Not that paltry then, I guess.

But seriously, ATI was a larger company with its hands in markets across the world.


By deeznuts on 8/27/2007 1:02:22 PM , Rating: 2
Not really. Market cap, which is a normal way to value a public company when going to purchase it, is less than $700M. Also, Gateway's book value is a paltry $261M or so.

If anything, they are overpaying lol.

A buddy of mine who I went to law school with is/was an attorney at Gateway, even before they merged with e-machines. I was jealous of him because he got a job with "Gateway" way back when. That envy didn't last long is all I can say, Gateway went down fast.


By Dactyl on 8/27/2007 1:26:01 PM , Rating: 2
ATi actually developed new technologies, designed hardware, and wrote software, including optimized drivers, which is just about the most difficult type of software to write (it's up there with optimizing compilers).

Gateway just assembled computers. The parts Gateway used were often expensive. CPUs, motherboards, HDDs, graphics cards, monitors, RAM--all of those can be expensive. But that doesn't mean Gateway as a company is worth tons of money. Expensive parts come in --> expensive parts go out. That doesn't mean the company is worth lots of money.


Here's another past blast
By Chaser on 8/28/2007 12:30:01 AM , Rating: 2
Northgate.




RE: Here's another past blast
By TomZ on 8/28/2007 12:47:44 AM , Rating: 2
More memorable: Northgate keyboards. Best in class, at the time.


RE: Here's another past blast
By IndyJaws on 8/29/2007 10:37:40 PM , Rating: 2
Don't forget Zeos!


Good memories...
By IndyJaws on 8/27/2007 2:51:14 PM , Rating: 2
I remember when I first started taking PC Magazine in the late 80's and the Gateway ads were always very clever. Each issue, I'd check to see if their prices went down, trying to make the decision...286? 386? SX or DX? Good times, good times.




RE: Good memories...
By EODetroit on 8/29/2007 9:31:53 AM , Rating: 2
Same for me, except it was Computer Shopper. One of the CS tech columns was where I first saw Anandtech mentioned and it occurred to me this whole internets thing might be useful after all.

But yeah, Gateway branding has become non-existent ever since the brilliant Dell "Dude your stoner college kid wants a Dell" ad campaign vaulted Dell to #1.


Acer support is awful
By Zeatrix on 8/27/2007 11:21:14 AM , Rating: 2
Bought an Acer laptop in January. The hardware is great but MAN, does their support suck big time. They've actually answered me wrong on one instance.




!
By Hyperlite on 8/27/2007 11:35:38 AM , Rating: 2
Go Acer! *hugs his travelmate 8200* =D




Might just be my luck
By acer905 on 8/27/2007 1:04:53 PM , Rating: 2
But from personal experience, the only computer that is actually worse than a dell is a gateway... But for some reason they still sell em, so who knows. I think i'll just stick to buildin my own pc's




The future has always been here.
By Dfere on 8/27/2007 2:57:14 PM , Rating: 2
Every company seeks advantage, if not competitive, then strategic. Acer sees an opportunity to buy up a competitor, and it does so. Even when most of the posts here agree Gateway lost its brand image, a competitor wants to buy it.

Why. Several reason, among them....

Acer doesn't even have to intend to leverage the brand name, they win by simply increasing market share. Analysts love this in the long run, buy recommendations increase over time, and market prices for Acer goes up. With higher market prices for its equity, Acer has more financial leverage, can borrow more etc, and the Officers pat themselves on the back for a job well done and push the Board to vote on increased salaries next time someone's contract is up at an annual meeting.

If there is a competitive or strategic advantage for Acer so much the better. Name me a market where it is decently profitable and businesses do not try to increase their presence in it.




Well this sucks.
By RjBass on 8/27/2007 11:21:03 PM , Rating: 2
Being in the computer business I always tell my customers "If you must buy a big brand, make sure it's Gateway".

I have an old Gateway in my shop that was built in the mid 90's. Everything is original, even the hard drive (a Maxtor believe it or not). That old computer, although slow, still runs like a champ. I almost never get Gateways in my shop for repairs. It's always Dell and Acer.

I really hope that this deal doesn't effect the quality of Gateways machines. Because in my opinion they are the only big brand worth buying.




Wow ... just wow
By webdawg77 on 8/28/2007 11:51:22 AM , Rating: 2
quote:
But at a $710 million purchase price, it's a comedown for a company that in 1997 was offered $7 billion to become part of Compaq Computer (which was eventually acquired by Hewlett-Packard).


http://news.com.com/Gateway+From+PC+powerhouse+to+...

Simply amazing. It's always unbelievable just how important timing can be.




Sorry...
By AWeav09 on 8/27/2007 10:12:24 AM , Rating: 1
quote:

There is being news out of the computer world today.


Somehow, I just don't think this is correct. It made me laugh though.




"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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