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Technology Stocks : Gateway (GTW)
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To: Skeeter Bug who wrote (4954)12/5/1997 8:33:00 PM
From: Brian Lempel  Read Replies (1) of 8002
 
Skeeter, You are right on our disagreement. What you call a shift in industry conditions I see only as poor management on the part of GTW.

First of all, I don't think your example of HWP is a very good example. For the past two years, their computer business has been aweful. It is only now starting to come back. Theirs was a problem of a poor product mix and poor quality.

I think the real problem here is that there is no true comparison to be made between GTW and another boxmaker. MUEI is a small name, has low recognition, and not too much market share. They will be the first to fall due to market share erosion. CPQ has a totally different product mix. DELL has a different focus.

GTW is the only company whose focus is to provide middle and high end systems mostly to the consumer.


I will repeat that the main issue should be whether GTW can return to its former level of efficiency. We know that lowered prices on the part of DELL and CPQ have not hurt their profitability. They would not have hurt GTW were they as efficient as 9 months ago. If they come remotely close, they will blow ou the estimates. Sales have grown in the 30% range YOY, but estimates for the 4th quarter are significantly lower than last year's. I think it's more a question of when they will return to higher profitability, not whether.

What do you think?

Brian

P.S. My web site will be up and running in just a couple weeks (hopefully by my Christmas break on the 20th). You can see my hobbies, pictures, and stock picks!
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