Dell Considers Buying Rival Acer

Michael Dell could prove that “Dell 2.0″ is more than a marketing throwaway by buying rival Acer, according to a leading Wall Street analyst. Sanford Bernstein analyst Toni Sacconaghi today laid out a plan for Dell to revive its fortunes by purchasing Acer – a relatively cheap target with a $4bn market cap.

Such a move would give Dell broader access to Asian and European customers, a stronger notebook line and a massive indirect sales channel. Of course, Dell would have to give up on everything it holds dear by swallowing its pride along with Acer. Dell 1.0 rose to the top of the computer kingdom via the lean, mean “Direct Model.”

The company also relied on a tight research and development budget and a rejection of large, disruptive acquisitions. This strategy worked well until 2005 and 2006 when Dell’s business started to slow. The company is now trying to correct its customer service problems and improve PC and server sales under the so-called Dell 2.0 model championed by reinstated CEO Michael Dell.

Buying Acer could be a quick fix for some of Dell’s issues, according to Sacconaghi. “A combined Dell-Acer would enjoy leading share in nearly every major region of the world, strong products in both the notebook and desktop segments, and far-reaching distribution through both direct and indirect channels,” the analyst wrote in a research note.

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