Gateway May Be Acer Target

Shares of the third largest computer manufacturer in the U.S., Gateway Inc. (GTW) shot up as much as 8.4% and closed up 6.7% on speculation it may be an acquisition target. Analyst believe Taiwanese computer manufacturer Acer Inc. was hoping to make an acquisition in the PC area within the next two years, and that would be Gateway. Analysts said Gateway is a likely candidate for a possible strategic buyout.

Such a transaction would put a company like Acer, with a faint presence in the U.S., in third place in the domestic PC race behind Hewlett Packard (HPQ). However till date both companies have declined to comment on this speculation. Lenovo, the Chinese computer manufacturer that bought IBM's PC business for $1.75 billion in 2005, was also thrown into the mix.

In September, Gateway rejected a $450 million offer for its retail business. Last month it said it would lay off more workers and cut $20-25 million in expenses. Gateway had already cut nearly 100 jobs, or about 5% of its work force, in the third quarter of last year.

Stocks: Gateway Inc. (GTW).

Competitors: Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), Lenovo Group Ltd. (LNVGY), International Business Machines Corp. (IBM).

ETFs: SPDR Technology (XLK), iShares Goldman Sachs Technology Index Fund (IGM), iShares Dow Jones US Technology Index (IYW)

(Source: SeekingAlpha)