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Rumors are swirling that computer manufacturer Gateway could be acquired by a top PC vendor in Asia.

On Wednesday, reports surfaced that Taiwanese computer manufacturer Acer could make a major acquisition in the PC area within the next two years, possibly in the U.S.

Analysts said Gateway (nyse: GTW - news - people ) is a likely candidate for a possible strategic buyout. Such a transaction would put a company like Acer, with a faint presence in the U.S., in third place in the domestic PC race behind Hewlett Packard (nyse: HPQ - news - people ) and Dell (nasdaq: DELL - news - people )

Needham & Co. analyst Charles Wolf called Acer a "tiger," fiercely competing on two continents and now looking to strengthen its presence on a third, though it can't be done without a sound plan for Gateway, which comes with its share of financial baggage.

"There is some unattractiveness," Wolf wrote in a client note. He described Gateway as "barely profitable," which is why private equity wouldn't dare show an interest.

Gateway also owns the Irvine, Calif.-based computer company eMachines, which it purchased for $235 million in 2004.

WR Hambrecht & Co. analyst Matthew Kather said Gateway would likely expect a significant premium to its stock price feeling its shares are undervalued, though he didn't put a price tag on the company.

Lenovo, the Chinese computer manufacturer that bought IBM's (nyse: IBM - news - people ) PC business for $1.75 billion in 2005, may also vie for Gateway.

"Lenovo could take over Gateway and have immediate an third place in the States," Wolf said. "Over time they could change the Gateway brand into the Lenovo brand since (Gateway) doesn't have much brand equity anymore."

Shares of Gateway were down 1.3%, or 3 cents, to $2.24 in Thursday afternoon trading.