Remember Gateway?

With no permanent CEO at the helm, deteriorating profit margins and increasingly fierce competition, PC maker Gateway(GTW Quote) has seen better times.

It's also suddenly in demand.

On Wednesday, eMachines founder Lap Shun Hui announced his desire to buy Gateway's retail operations for $450 million.

The offer came two days after it was revealed that a hedge fund consortium picked up a 10% stake in Gateway, stating its intention to assist the company "drive the business and build value."

As a turnaround project, Gateway is a bold bet.

No less of a tech giant than Dell(DELL Quote) has been humbled by the evolution of the PC market, as competitors have learned to emulate Dell's prowess assembling computers at rock-bottom costs. And Gateway in particular faces an uphill battle winning small-business customers as Asian rivals like Lenovo and Acer step up their efforts in the U.S.

But that didn't seem to faze Wall Street, with Gateway's shares gaining 27 cents, or 15.7%, to $1.99 in recent trading Wednesday.

According to Pat Adams, the chief investment officer of Choice Funds, the surge of interest owes more to valuation than anything else: The stock got too cheap, he says.

A year ago, Gateway traded at $4; in December 2004, the stock was nearly $7. The sense that investors left the company for dead was reinforced in July when Gateway was dropped from the S&P 500.