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Hysteria Over Acer-Gateway

The business press stopped at little to overstate the impact of this deal.

In his haste to get to all the varied interpretations of the Acer-Gateway (GTW) deal, please forgive The Business Press Maven if he simply seizes up.

If anything, the coverage of this merger is a departure, because we usually get instant consensus marked by so much agreement across different media outlets that it comes at investors like thick, choking smoke. Here, strangely, there are different interpretations by the wagonload.

We'll eventually highlight the right interpretation. But your lasting lesson as a savvy investor is, as always, to never rely on one bit of reporting or opinion. (Note to reader: unless, of course, it is mine. Then rely away.)

Anyhow, to the

Financial Times

, the $710 million deal meant primarily that Acer's position will be strengthened in

the American market.

The combined company's worldwide bragging rights in terms of gaining third place from Lenovo in global PC sales behind

Hewlett-Packard

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and

Dell

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("We're No. 3! We're No. 3!") is subordinated, which is good, I suppose. Market share rankings are fool's gold and come with no guarantee of profits. (Do you hear me, American auto industry?)

Though the

FT

led more modestly,

Business Week

, for its part, harked back to 1949, with Mao Zedong taking control of China and Chiang Kai-shek beating it across the Taiwan Strait.

That crazy little thing called the American market is not mentioned until the very end of the article, where, after talk of all the sibling rivalry with Lenovo, we hear that Acer can use a "boost in the U.S. market, where Acer is only No. 6." So will this catapult it ever higher, strengthening it in the U.S. market -- like

FT

highlighted up top? Well, not exactly.

Gateway, after all, is only No. 3 in America, which is a rock skip from No. 6. Besides, Gateway is troubled, and integrating a PC company ain't what it used to be, even if the company does have experience.

Remember that rivalry with Lenovo, the one that conjures up images of Chiang Kai-shek getting three steps toward the door? Well, Acer is going to have to look to it for guidance on how to absorb American acquisitions. Why does that sound a bit less than promising?

That brings us to

Forbes

, a publication that

reaches for historical perspective by leading not with Mao but with Carly.

Do I ever feel that seizure coming on.

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Here's the "thinking." Hewlett-Packard has benefited from Dell's self-destruction, which, somehow, has caused some members of the business media who had previously beatified Carly Fiorina, H-P's former CEO, to revive their canonization efforts. Some even went so far as to link Gateway's takeover to ... uh, Carly's greatness.

And what does all that mean for the future of the competitive PC business?

Writes

Forbes,

in the article titled

Thank Carly: "Of course, while Fiorina may have been the first to call the tune, that doesn't mean HP will continue to dance away with its competitors' customers."

So, um, it means, like, nothing?

Best as I can tell, this was the world's most convoluted way of saying that with its purchase of Gateway, Acer had a chance to eat H-P's lunch.

Moving on quickly. I don't frequently highlight work of

TheStreet.com

, if only to avoid accusations of favoritism, but I do want to point out something I really liked in

Alexei Oreskovic's story on the merger, putting press conference announcements of deals in their proper place: the rubbish bin.

Look at Alexei's lead, which mentions the deal's formal public announcement, but does not bite on all official claims:

Executives at Gateway and Acer carried on about the many benefits of teaming up to sell PCs in the U.S., after announcing their $710 million merger Monday.

"Carried on"! Nice. Verbal eye rolls serve investors well when it comes to such wedding-day announcements, usually done to such promise and fanfare (see: the headiness of AOL/Time Warner's wedding-day press conference -- and a million more).

But the reality of such deals often runs counter to the excitement. I love the distance, the detachment, the wry fight-back of a "carried on." It serves investors well. Alexei went on to say that the true meaning of the deal could be found in Asia.

Anyhow,

The Wall Street Journal

-- at least to my uncannily brilliant mind -- hits

closest to home, overall.

They don't indulge themselves with some lead that traces back 60 years or one, much worse, that throws wet kisses to the disgraced CEO of a company that wasn't even involved.

Instead, Jason Dean and Christopher Lawton take a step back and look at what the deal signifies for the PC market at large. In a dreadfully competitive market the world round, they say, the main thing is that size matters.

"The banding together of Taiwan-based personal-computer maker Acer Inc. and Gateway Inc. of the U.S. underlines how crucial scale is in the consolidating global personal-computer market, where margins are thin and competition is increasing," they say in their lead.

In the future, they continue, all you need is cost. In other words: The more scale you have to purchase components at lower prices, the more savings you can pass along. And with PCs a commodity, well, that's as good as it gets.

No quotes from Chiang Kai-shek, Mao or Carly and no Sophie's Choice about whether the American or Asian market will be more likely to improve. But, in centering on the unglamorous notion of cost cuts through scale, the article probably was the best in a pretty lame class.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;

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