DailyTech - John Hui Offers Big Bucks for Gateway Retail Business

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IT John Hui Offers Big Bucks for Gateway Retail Business
Sven Olsen (Blog) - August 24, 2006 3:19 AM

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9 comment(s) - last by deeznuts.. on Aug 24 at 1:21 PM

Computer mogul John Hui has his eye on another PC manufacturer

Lap-Shun Hui, better known simply as John Hui, has placed a $450M USD offer out on the retail division of Gateway PCs. Hui, co-founder of eMachines and founder of KDS, has a bit of a name for himself in the PC industry with mega-takeovers and low-cost PC components.

Hui recently got his name in the papers after putting in an $87M USD bid out on the retail division of NEC. However, it appears as though that deal had fallen through as Hui placed his $450M USD bid on the company in a letter dated August 3, 2006. In another memo, dated August 21, 2006, Hui adds "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. I believe that management and the board need to adopt a sense of urgency to address Gateway's problems."

eMachines sold for more than $30M cash and $235M stock in June of 2004 to Gateway, of which Hui received a fairly nice check. With Hui's bid on the retail division of Gateway, things really will have come full circle has the majority of the reason Gateway continued to hold market share over the last two years has been directly due to the eMachines brand.

Hui already holds nearly 5% of Gateway as part of a stock-swap he received during the eMachines acquisition.

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A real Change

By Totalfixation on 8/24/2006 7:40:50 AM , Rating: 2

Honestly that brand needs to change big time, they need to change away from the cow box logo. Everytime I think of purchasing a new laptop or PC, I never think of gateway. Even if they have something nice to offer i just stray away from them. Just dont know why, but i find them unappealing.

RE: A real Change

By marvdmartian on 8/24/2006 8:57:23 AM , Rating: 2

Well, at least it's just the box with the cow pattern on it, and not the computer tower or laptop itself! ;)

I don't have anything against Gateway, at least nothing specific. They're just another slap it together, cheapest components, half-assed customer service computer retailer, much like Dell, HP/Compaq, etc, out there. Their bottom line is to sell you a computer today, and then hopefully another one once you've got this one paid off, then another one, etc.

To all those companies, it's just that attitude that caused me to build my first computer, back 4-5 years ago, and will continue me in that same direction. While I don't have the savings anymore that I used to enjoy (my Gateway Athlon 750MHz computer system, the last one I bought out of a box, cost me $1700.....my first computer build, an Athlon XP2200+ a year and a half later, cost me ~$700, with twice as much mb ram and 5x the hard drive space), I'd still rather build than buy some rubber-stamped garbage.
In fact, it's a 50/50 chance right now that my first laptop will be a barebones that I'll assemble into my own system. :)

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Someone help me out.

By MachFive on 8/24/2006 8:58:02 AM , Rating: 2

I was always under the impression that despite the public appearance that Gateway bought eMachines, eMachines is really running Gateway, due to the fact that many of eMachines board members replaced Gateway ones.

Was I misinformed?

RE: Someone help me out.

By deeznuts on 8/24/2006 1:19:15 PM , Rating: 2

No, it was a sort of hybrid type acquisition. Officially Gateway bought eMachines. However, a lot of the elements of eMachines were adopted, because, well Gateway was in shambles and eMachines was doing quite well. A law school buddy of mine worked in Gateway's legal department. So they abandoned their headquarters in San Diego (of which they just built a campus I might add) and headed up to Irvine, emachine's location. emachine's legal department also took over, as well as several other elements.

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Not to nitpick...

By dali71 on 8/24/2006 8:09:03 AM , Rating: 2

The proper spelling is mogul, not mogel.

If they were smart...they'd listen

By Ytsejamer1 on 8/24/2006 9:02:51 AM , Rating: 2

I remember eMachines were the absolute worst thing on the market a number of years back. They promoted the cacheless wonder (Celeron) computer systems for cheap and they were of really poor quality. But over the years, eMachines changed their stripes and actually built a darned good quality machine. A lot of them used AMD Athlon XP chips moving into the A64 realm. But they use standard parts, can be repaired anywhere, and are quick little machines...all for around $500.

eMachines also has made some really nice laptops and really were gaining steam in 2004 when they sold off to Gateway. Gateway hasn't done much with the brand unfortunately; although the sales of eMachines probably are propping up Gateway at this point.

If this guy wants to give it another whirl, I'd give him the opportunity considering how he was able to get eMachines going in the right direction.

Damn

By deeznuts on 8/24/2006 1:21:10 PM , Rating: 2

Gateway popped up on one of our stock screens here at work, and I was contemplating buying it at $1.30 not but a couple of days or a week ago. Damn! Oh well.