Dell Inc. (NASDAQ: DELL) stock is trading lower today as Taiwanese computer maker Acer has completed its tender offer for struggling U.S. PC vendor Gateway (NYSE: GTW). The combined company will be the world's third-largest PC vendor, behind Hewlett-Packard (NYSE: HPQ) and Dell, possibly putting some pressure on the top two. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on DELL.

After hitting a one-year high of $29.61 in July, the stock has been shaky over the past three months. This morning, DELL opened at $28.05. So far today the stock has hit a low of $27.85 and a high of $28.22. As of 11:10, DELL is trading at $27.87, down 31 cents (-1.1%). The chart for DELL looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $32.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in 3 months as long as DELL is below $32.50 at January expiration. Dell would have to rise by more than 33% before we would start to lose money.

DELL has not been above $30 since early 2006 and has shown some resistance around $28.50 recently. This trade could be risky if the company's earnings (due out on 11/29) are a positive surprise, but even if that happens, this position could be protected by the resistance the stock formed when it topped around $29 in July.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DELL, GTW, or HPQ.

While the news that Acer would be acquiring Gateway (NYSE: GTW) did wonderful things for shares of Gateway, the same cannot be said for Acer. Acer, a Taiwanese company also traded on the London Stock Exchange, is down more than 10% since the announcement of the deal.

Critics believe that Acer is overpaying for Gateway, and also anticipate that the company will have trouble integrating the brand. But in an interview with the Financial Times, the usually soft-spoken Wang-Jen Tang defended the acquisition, saying that it was the company's best shot at achieving profitability in the North American markets -- Acer simply doesn't have strong brand recognition here, and Tang is hoping that the Gateway and eMachines brands will allow the company to lift its net margin in the US into the 2-3% range.

Only time will tell who is right, Tang of the market, which has spoken clearly about how it feels about the deal. But history has demonstrated amply that, the vast majority of the time, acquisitions fail to create value. If Tang is right, this will have to be the exception.

From an investor's perspective, Gateway shares are probably not worth buying, as some had suggested as recently as last week. Given that many observers feel Acer is overpaying, a competing bid seems unlikely to emerge. And what company would want to jump in when the company that just announced the deal has seen its stock hammered in the past week?

Dell, Inc. (NASDAQ: DELL) is set to release Q2 financial results tomorrow in what is probably one of the more highly anticipated earnings releases in quite a while. Just a few weeks ago, the company concluded its own internal financial investigation into possible financial shenanigans and the results included over $150 million in quarterly restatements stemming back to 2002. The official SEC investigation is not through yet.

Dell's reports tomorrow will shed some light on the fight the computer maker has had since January of this year to try and catch up to larger rival Hewlett-Packard Co. (NYSE: HPQ), which reported a touch under $25 billion in revenues for its latest quarter. Has Dell seen increased shipments of PCs with its newer and colorful laptop systems? Is the Wal-Mart retail relationship going well for the company? These questions and many more are on tap for tomorrow's call.

Analyst expectations are for Dell to report an earnings figure of 30 cents per share on revenue of $14.63 billion. The company should be able to make that number despite supply problems that have set back newer and colorful Inspiron notebook shipments (according to industry watchers). It will be interesting to see if any analyst questions come up about this week's acquisition of smaller PC rival Gateway, Inc. (NYSE: GTW) by Taiwan's Acer. Stay tuned tomorrow for liveblogging coverage of the Dell Q2 webcast and call.

Shares of Gateway Inc. (NYSE: GTW) soared on Monday when the company agreed to be acquired by Acer for $1.90 per share. The stock closed at $1.85 on Tuesday, a spread of a little less than 3% below the expected closing price.

According to TheStreet.com, there may be more to come. Senior writer Alexei Oreskovic cites an unnamed source who claims that the deal has an out for Gateway if it can find a superior offer, and Chinese Lenovo would appear to be a possible contender.

While the Acer deal presented a huge premium over the stock's most recent closing price prior to the announcement -- more than 50% -- it's actually lower than the stock was trading as recently as May. Even with the deal, there are still a lot of shareholders underwater, and that could spark a shareholder rebellion of sorts. Gateway is in the early stages of a turnaround, and I know many investors had a long-term target much higher than $1.90.

Shares of Gateway, at their current price, may represent a low-risk speculative opportunity. The worst-case scenario (barring something really bizarre) is that you can tender the shares for $1.90 when the deal closes. If another bidder emerges, there could be tremendous upside.

Stock futures lower ahead of data, following bank downgrades

Apple Inc. (NASDAQ: AAPL) and AT&T Inc. (NYSE: T) are no doubt concerned about iPhone hacks to unlock it from the AT&T network. While their lawyers are working on warning the hackers, BusinessWeek explains while this time the law may not be on the hackers' side. The laws in the matter are fuzzy, apparently. It is believed Apple and AT&T will point to to the DMCA's section 1201, but communications services aren't copyrightable under the Act.

Acer Inc.'s shares fell sharply today after announcing it would acquire Gateway Inc. (NYSE: GTW) for $710 million despite pushing the combined company past China's Lenovo Group Ltd. to third place worldwide as vendor of personal computers, behind Hewlett-Packard (NYSE: HPQ) and Dell (NASDAQ: DELL). Acer may be paying too much to gain this market share.

Meanwhile, attempting to fuel growth into its printing division, Hewlett-Packard Co. (NYSE: HPQ) will roll out a $300 million campaign designed to pick up even more market share.

General Motors Corp. (NYSE: GM) formed a new venture in Malaysia with DRB-HICOM Bhd. to explore making Chevrolets for Southeast Asia. It seems that GM is also still interested in forming an alliance with Proton, though.

As Open XML document format from Microsoft Corp. (NASDAQ: MSFT) may be adopted as an international standard this weekend, critics urge to reject it, saying it is a ploy to lock in customers, who could lose control over their own data in a worst-case scenario.

According to the Wall Street Journal, Yahoo! (NASDAQ: YHOO) yesterday said that its Chinese subsidiary had to follow local laws [subscription required]. Yahoo! is referring to the case when the company gave authorities private information about political dissidents that led to their imprisonment.

The personal computer world just never stops changing. In addition to Acer's buyout announcement involving Gateway, Inc. (NYSE: GTW), Quanta Computer -- the world's largest notebook computer contract manufacturer -- has just lost its CEO. Quanta, which makes notebook computers for such names as Dell, Inc. (NASDAQ: DELL) and Apple, Inc. (NASDAQ: AAPL), witnessed the weekend resignation of CEO Michael Wang, which leaves quite a few questions unanswered in the personal computer space. Quanta is not a name known to many consumers, but the company has in many ways been responsible for the multi-billion dollar transition from desktop computers to notebook computers over the last few years.

Is Quanta about to be sold to Hon Hai Precision, which is Taiwan's largest electronics conglomerate and the world's largest contract manufacturer? Possibly, and this recent move may indeed signal what lies just ahead. Former CEO Wang was in disagreement with the company's co-founder (Barry Lam) over the strategic direction of Quanta, which no doubt revolved around the rumored impending sale of the company.

Hon Hai may be known better by the fact that it makes Apple's iPods. However, the one large electronics contracting segment it is weak in is notebook computer manufacturing. With notebooks displacing traditional desktop computer units as the PC of choice for a majority of consumers (and businesses as well), having a strong presence here would seem natural for the largest electronics contract manufacturer in the world.

Taiwan's Acer continues its march for dominating the entry-level and mid-level segment of the laptop computer market (and some desktop computers as well) by buying a well-known brand name in the U.S. computer marketplace: Gateway, Inc. (NYSE: GTW). Was this seen coming? Looking at last year's GTW price performance, probably. GTW shares stand at under $1.25 each right now. Time was ripe for a buyout, since Gateway is the third-largest PC vendor in the U.S. behind Hewlett-Packard, Inc. (NYSE: HPQ) and Dell, Inc. (NASDAQ: DELL). Buying it for under a billion is an obvious coup for Acer. Even if the company's financials are in shambles, the name alone is worth what Acer is ponying up.

Acer, Inc., which has seen a resurgence in recent years as it aggressively competed with Toshiba, Hewlett-Packard and Gateway in the market for PCs at computer and general merchandise retailers, plans to buy Gateway for $710 million, or $1.90-per-share. What is Acer's reasoning? A few things: a cheap acquisition price and instant market share gain. This will propel it closer to taking on retail computer titans like HP and Toshiba, and possibly even Dell should the company stretch out further into retail channels outside its current relationship with Wal-Mart Stores, Inc. (NYSE: WMT).

Acer's position as the fourth-largest PC company in the world behind HP, Dell and Lenovo group will be strengthened by the Gateway purchase, no doubt. The high expectations at the time the bargain-basement PC brand e-machines and Gateway joined forces a few years ago, were soon dashed away completely and the brand has been declining ever since. It's still the third-largest PC vendor in the U.S. solely by virtue of being on the shelves of so many retailers, but that's all the Gateway brand has going for it. My guess: Acer will keep the name for a while to see how it grows, and may jettison it in 2008 completely if the brand remains stagnant.

U.S. stock futures are indicating a lower open today after U.S. equities had a solid performance last week. This morning, however, investors will examine two deals, one in the steel industry and one in the PC manufacturing business as well as await some housing data to come out after the open. Another sign that the credit concerns will not leave Wall Street soon is the latest news that Home Depot agreed to cut the sales price of its wholesale supply unit.

Last week, Wall Street had solid gains with U.S. stocks on Friday closing sharply higher. The Dow industrials gained nearly 150 points or 1.08%, with the broader indices gaining even more. An unexpected rise in new-home sales helped push markets up as some hope the worst may be behind us.

This morning, more housing data is due. The National Association of Realtors will release July existing home sales at 10 a.m. EDT. Economists are expecting sales to decline somewhat in July. This report may be crucial to how the trading session unfolds later in the day especially in the background of a new economic survey released today saying that "the risk of massive defaults on subprime mortgages and heavy debts now poses a bigger threat to U.S. economic prosperity than terrorism."

This morning's data is kicking off a busy week of economic indicators for investors to sink their teeth in. But not only investors will examine the data, the Federal Reserve will too as it is watching the economy as well as the financial markets. Should the economy show further signs of weakness, the Fed may have to cut rates. Incidentally, this may sometimes be confusing as bad reports could push the markets higher due to increased expectation of a Fed rate cut.

Overseas, Asian markets closed higher, having a better day that they have in the past two weeks. In Europe, shares are advancing for a seventh day. Evidently, concerns over the U.S subprime meltdown eased.

In corporate news, two deals made the headlines:

Acer Inc. plans to acquire U.S. computer maker Gateway Inc. (NYSE: GTW) for $710 million, offering $1.90 per GTW share, a 57% premium over Friday's close. GTW shares are up 48% in premarket action.

United States Steel Corp. (NYSE: X) has agreed to acquire Canada's Stelco Inc. (TSX: STE) for C$1.1 billion, or C$38.50 ($36.56) a share, a 43% premium over Friday's close of C$26.93.

Among other news, the Home Depot Inc. (NYSE: HD) has lowered the price of its wholesale distribution business and tentatively agreed to sell it to a group of private equity firms for $1.8 billion less than originally planned. HD shares are up 1.93% in premarket trading (7:29 a.m.).

MAJOR PAPERS:

• Higher interest rate are making commercial real estate deal makers think twice about deals, according to the Wall Street Journal's "Heard on the Street," sending shares of companies like Archstone-Smith Trust (NYSE: ASN) down from $64 to $60.75 a share.
• The Financial Times reported that U.S. senators have proposed new laws that would impose higher taxes on private equity firms that list their shares on stock exchanges, a move that could be a blow to private-equity firm Blackstone Group, which is seeking to list its shares.
• The U.S. and U.K. are working on a treaty that would allow Britain to buy American weapons without obtaining export licenses, the Financial Times reported; any deal on the issue could face opposition in the U.S. Congress, although the British believe eliminating the need for the licenses would expedite the arms purchasing process.

OTHER PAPERS:

• Turnaround candidate Eastman Kodak Company (NYSE: EK) may be ready to shine, BusinessWeek's "Inside Wall Street" column reported, and now may be a good time to evaluate a potential EK play, according to investment advisor Gregory MacArthur.
• Gateway Inc (NYSE: GTW) is selling products in China for the first time in a pilot program with Digital China Holdings Ltd, the LA Times reported.
• According to The Nation, The Dow Chemical Company (NYSE: DOW) is planning to ask its board of directors later this year for approval to invest in five petrochemical projects in Thailand.
• Cementos Portland Valderribas, a unit of Fomento de Construcciones y Contractas is planning a bid for Texas Industries Inc (NYSE: TXI), the Expansion reports, citing people close to the situation.

Lost this morning in all the news about Hewlett-Packard's (NYSE: HPQ) PC share growth and Dell's (NASDAQ: DELL) fall from grace was the increase in the sales of Apple (NASDAQ: AAPL) Macs reported late yesterday.

Sales of the Mac rose 30% during the first quarter and its market share hit 5% in the U.S., according to Gartner. Hewlett-Packard and Toshiba both grew over 25%, but the Apple number is still impressive. If the Mac continues its current growth, it could pass both Toshiba and Gateway (NYSE: GTW) in the next two years.

Investors forget about the Mac. In the last reported quarter, Mac sales were up 40% to $2.4 billion. That was out of total revenue of $7.1 billion for all of Apple.

iPod sales may falter, and the iPhone may not turn out to be a big hit. But, there is always the Mac, growing at 40% a quarter.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In an earlier article this morning, Eric Buscemi wrote Time to build a position in Dell? My Answer is, ABSOLUTELY NOT! I will be short and sweet in my methodical reply to this question.

1. Dell Inc. (NASDAQ:DELL) built its business in a world that does not exist today. When Michael Dell started he had a good idea, a good mind, a good work ethic and low overhead. Most importantly, he had a market place filled with hundreds of other manufacturers and computer assemblers that were inefficient and ineffective in competing with his enterprise. As Dell grew, he drove competitors out of the business, taking market share all the way. Today, few competitors are left, most of them large and well capitalized companies with strong management. Hewlett-Packard Co. (NYSE:HPQ), Toshiba, Lenovo, Sony Corp. (NYSE:SNE), Gateway Inc. (NYSE:GTW) and Apple Inc. (NASDAQ:AAPL) will not be driven out of business very easily, leaving all companies to jockey for percentages of the market. This is a daily battle and while Dell may be equal to the task, growth will occur only with great effort.

Main market news here.

Alcatel-Lucent's (NYSE:ALU) court win over Microsoft Corp. (NASDAQ:MSFT) regarding patent infringement opens the door for more cases according to some analysts, including Apple Inc. (NASDAQ:AAPL), Nokia Corp. (NYSE:NOK) and Sony Corp. (NYSE:SNE). Others note that Microsoft has a few patent infringement cases that it filed against others including Alcatel-Lucent. Alcatel-Lucent still has open cases against Dell Inc. (NASDAQ:DELL) and Gateway Inc. (NYSE:GTW).
In the mean time, n pre-market trading, AAPL shares were down 0.18% as of 7:44 a.m., ALU shares up 0.76% as of 7:26 a.m. and MSFT shares down 0.37% as of 7:40 a.m.

Citigroup Inc. (NYSE:C) was initiated by JPMorgan with Overweight.

DaimlerChrysler (NYSE:DCX) - According to the Financial Times, at least four private equity groups have been in preliminary talks with DaimlerChrysler about buying Chrysler.
Also, DaimlerChrysler's trucks business will make an operating profit this year despite a sharp U.S. market contraction, according to the division head.

Pfizer Inc.'s (NYSE:PFE) Celebrex drug approval was extended by 17 European for use in symptomatic relief of ankylosing spondylitis in adults.

According to India's Bharti Enterprises chief, it and Wal-Mart Stores, Inc. (NYSE:WMT) are very close to finalizing a deal for a retail joint venture.

Azerbaijan Airlines signed an order for three 787-8 Dreamliners and two 737-900 Extended Range aircraft of Boeing Co. (NYSE:BA) in and order valued at $609 million at list prices.

Clear Channel Communications, Inc. (NYSE:CCU) reported a 50% fourth-quarter earnings drop but manage to beat Street estimates nonetheless. Net income dropped 54% to $211.3 million, or 43 cents per share, from $461.6 million, or 86 cents per share, a year earlier. Analysts polled by Thomson Financial were looking for profit of 41 cents per share on revenue of $1.89 billion.

Stock futures are positive in early morning trade, indicating to a similar start for stocks amidst announcement of job cuts and upgrades for the Big Three.

Oil actually rose above $60 a barrel today for the first time since early January. Geopolitical concerns, especially, tensions between Iran and the U.S. as well as cold temperatures boosted oil to above $60 before easing back a bit.

Alcatel-Lucent (NYSE:ALU) announced fourth-quarter earnings this morning, posting a €618 million ($802.84 million) loss and a planned job cut of 12,500 workers. While ALU shares were up in Paris following the announcement, they trade down about 1% in pre-market.

DaimlerChrysler AG (NYSE:DCX) announced today it has sold 7.5% of its shares in Airbus parent company EADS to a private investment group for approximately €1.5 billion ($1.95 billion) in cash. Meanwhile, the Detroit News also reported that the company will cut 7%, or 1,000 white-collar salaried jobs, primarily in Michigan.

As this earnings period begins to wind down, with most of the juggernauts already having reported, we begin to see reports from some smaller, lesser known companies, along with reports from former high-fliers like Gateway Inc (NYSE: GTW) and Overstock.com Inc (NASDAQ: OSTK).

Monday February 5

• Overstock.com to report Q4 earnings, conference call at 11am.
• PDUFA date for Watson Pharmaceutical Inc's (NYSE: WPI) Actoplus XR for non-insulin dependent diabetes mellitus.

Tuesday February 6

• Nike Inc (NYSE: NKE) to hold Analyst Day at 12pm. Credit Suisse First Boston believes Nike will announce the rollout of a specialty retail store concept at the meeting.

Wednesday February 7

• Equinix (NASDAQ: EQIX) to report Q4 earnings; conference call at 5:30pm. Kaufman Brothers notes that the company's last overhang was removed in the middle of January and it sees a $93 price target on the stock.
• PDUFA Date for Roche Holding's (OTC: RHHBY) Cera for chronic renal disease.

Thursday February 8

• Monthly sales reports reports due from Abercrombie & Fitch Co (NYSE: ANF), Limited Brands (NYSE: LTD), Nordstrom, Inc (NYSE: JWN) and Wal-Mart Stores Inc (NYSE: WMT).
• Gateway to report Q4 earnings; conference call at 5:30pm.

Friday February 9

• Corning Incorporated (NYSE: GLW) to hold Investor Meeting at 9am with presentations from its CEO and CFO.