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Technology Stocks : Gateway (GTW)

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To: Bill F. who wrote (7575)	5/29/2000 9:29:00 PM
From: D. Swiss	Read Replies (2) of 8002

Bill F., re: "they were adamant that it would be flat q4/q1 which was a surprise since it usually drops". I don't see this as a negative. As you said it usually drops, revenues for Q4 '97 were 1.98 B, Q1 '98 1.728 B, Q2 '98 1.6 B, Q4 '98 2.31 B, Q1 '99 2.1 B and Q2 '99 1.6 B. So the fact that they went from 2.45 B in Q4 '99 to 2.33 B in Q1 '00 is positive. Could it be that their diversification into out-of-the-box revenue is smoothing out their seasonality? re: "can you explain the big drop in sga with all those new store opening and with revs up". They went from 14.7% of revenues down to 14.3% of revenues in Q1 yoy. I consider this positive! Don't forget they announced a target rate of about 12% not too long ago and they were at 13.5% in Q4 '98 and 10.9% in Q4 '97. As far the new stores, if they are renting it is appropriate to capitalize leasehold improvements and if they are purchasing the properties, they capitalize the property cost and improvements, only the amortization hits sga. They have been spending a ton of money on marketing, is it possible that they are lightening up now? :o) Drew

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