Acer Inc. who has just re-entered the Android game with its new Liquid series of smartphones and the Iconia line of tablets, might be acquired by Asustek Computer Inc. (aka Asus) according to the news appeared in Bloomberg. By acquiring its taiwanese rival, Asustek may become the world’s biggest personal-computer maker.
Demand for low-cost personal computers had made Taipei- based Acer the world’s second-largest by shipments in 2009 before it slipped to third as tablet computers supplanted PCs. Acer, which reported its first annual loss in 2011, has a market value of $2.4 billion after falling about 75 percent from a high reached shortly before Apple co-founder Steve Jobs unveiled the iPad in January 2010. Acer now trades at 0.15 times revenue, one-third the valuation Asustek fetches, according to data compiled by Bloomberg.
By acquiring Acer, Taipei-based Asustek would gain a sales network and brands to push the superior technology and higher-priced products that allowed it to avoid head-on competition with the iPad, Sanford C. Bernstein & Co. said. Asustek designed Google Inc.’s new Nexus 7 tablet, while Acer owns the Gateway and Packard Bell brands. Combined, the companies would hold 18% of the global PC market, overtaking Hewlett-Packard Co. (HPQ) for the top spot, according to market researcher Gartner Inc.
The focus on keeping costs low and undercutting rivals on price meant Acer eschewed research spending in favor of adopting Wintel systems, Intel Corp.-based PCs using Microsoft Corp.’s Windows operating software. With Apple’s iPad denting demand for cheap PCs since it went on sale in 2010, the lack of new technology has become a liability for Acer, said Christine Wang, an analyst at Daiwa Securities Group Inc. in Taipei.
When asked for this plans, David Chang -Asustek’s chief financial officer- said:
We have no such plans, we prefer organic growth because M&A has many challenges. Our weakness was in channel distribution which we’ve improved a lot in the past two years.
Acer, which rose as much as 2.5 percent trading today, was up 2.1 percent to NT$26.70 at 11:00 a.m. in Taipei. Asustek gained 1.7 percent to NT$299.50.