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Experts: Gateway Is Ideal Takeover Target: Page 4 of 5

But IDC industry analyst Roger Kay thinks Gateway should seek ``some exit strategy for the whole company, to sell it to somebody else.'' (Gateway has a financial relationship with IDC). Kay said Gateway's not big enough to get the best component prices, and suitors would like its strong U.S. position and well-run supply chain.

Further evidence of Gateway's recovery will attract Acer, Lenovo or Samsung, Kay predicts: ``If you matched up Acer and Gateway, they would work out.''

Acer is breaking into the United States with a model it found successful in Europe: an emphasis on using resellers and distributors in the small to medium-sized business market. In the United States, however, it has avoided the consumer and retail areas, so far. Gateway's brand could add a strong consumer business to Acer's growing success in the U.S mid-market.

Samsung, says Kay, is flush with money, a big component supplier and has no brand in the United States or Europe, despite being the eighth-largest brand in Asia.

Smith Barney analyst Richard Gardner sees some benefits to an Acer-Gateway deal but thinks notebook sales give Acer ample growth opportunities for now, so he doesn't expect Acer to step up until 2006.