Gateway makes bid for rival eMachines

zerodamage

"Gateway plans to acquire rival eMachines in a bid to regain its footing in the PC game and broaden the distribution of its Gateway-branded consumer electronics devices at retail.

The Poway, Calif., company plans to purchase privately held eMachines for $30 million in cash and 50 million shares of stock. Based on Gateway's closing price of $4.09 Thursday, the total value of the deal would be approximately $234.5 million."

Source: Cnet

WaltC

Interesting story. I like to see them bringing AMD-based machines back into GateWay but wonder how it will impact Intel's subsidies to GateWay for being Intel exclusive (before GateWay got into financial trouble they were sellling AMD-based boxes and when they began downsizing they discontinued them saying they couldn't afford to support both. I'm sure the fact that Intel could subsidize them but AMD couldn't played a part.)

My own feeling about Gateway is that the company began going south when it moved into retailing with so many retail computer stores. There's a sizable one in my town, and every time I've visited there were always many more sales people than customers. That's an awful lot of overhead to support that Dell doesn't have to worry about, for instance. The article says the plan is to stock eMachines in the stores and continue to sell the Gateway brand direct-order, which will be a refreshing change from the current model of order-only storefronts . It will be interesting to watch how this turns out, since by going this route Gateway is not only competing with Dell/HP, as usual, but will now be competing with retailers such as Best Buy. Being able to visit a Gateway store and walk out with a purchase in the same day should definitely help their bottom line, no question about it. But I still wonder if Gateway shouldn't have stayed where it was in mail order prior to going the storefront route.