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Technology Stocks : Gateway (GTW) -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (7536)	4/20/2000 9:13:00 AM
From: D. Swiss	Read Replies (1) \| Respond to of 8002

mj, I agree with you 100%. I am a pretty sophisticated PC user, but buying a new PC is very confusing in terms of the all the variables. It is very helpful to have someone explain in layman's term what the different options are and how they add value to the overall picture. When I bought a PC in October, I started out with a 400mhz celeron with the intention of upgrading it with high DRAM, I ended up buying a 500mhx PIII with 128 DRAM. As far as GTW as an investment, they are coming out of a Q that was troubling for the industry mainly related to the y2k slowdown. Although it didn't stand out in the report, GTW had trouble meeting demand and ended the Q with a record backlog. This bodes well for the future (as long as Intel can supply enough chips or AMD can compensate for this issue). According to IR, they are confident that they can meet the demand in the Q in the face of the supply issue (take this with a grain of salt). Putting the supply issue for the side (which will eventually work its way out), GTW is achieving its beyond-the-box goals and is growing its bottom line nicely. I suspect in twelve months from now, you will be happy with your investment. :o) Drew

To: MJ who wrote (7536)	5/24/2000 4:04:00 PM
From: D. Swiss	Read Replies (2) \| Respond to of 8002

GTW conf call summary: 02:18pm EDT 23-May-00 Montgomery Securities Intl. (King, Kurtis) GTW: Gateway CFO on Supply Environment We held a conference call this morning with GTW's CFO, John Todd, regarding the component supply environment. Replay # is 800/839-2871. No code required. Todd is comfortable with consensus $2.15B revs and $0.36 EPS for 2Q. Supplies are tight but look like a 'limit on upside' for GTW versus a downside risk. We believe GTW's corporate segment should return to year/year growth in month of June, after declining (as expected) in April and May. Intel processor shortages are far and away GTW's current supply problem. GTW expects to double its AMD mix this quarter due to Celeron chip shortages. Todd said GTW will get 80K Celeron chips this quarter but could sell double that. Gateway can shift about half of unmet demand over to AMD but not more because of board constraints likely related to its unexpectedly quick AMD ramp-up. Top five vendors best off in current environment. Todd confirmed our take that smaller vendors are suffering on allocations at the expense of the leaders in the face of current shortages. GTW has been approached by smaller PC manufacturers seeking to OEM boxes because of parts shortages. Tight supplies have so far been a slight positive for GTW's gross margins. GTW will raise price on one Celeron configuration from $899 to $999 effective tomorrow because of shortages. DRAM pricing is currently stable and availability is good. GTW is planning for higher DRAM prices in 2H but Todd said processor shortages are a reason why DRAM prices may not go up. Capacitors are also in short supply but issue is moot for GTW given processor shortages. Results out of first 35 OfficeMax stores have been positive ASPs slightly above GTW's corporate average, or about 3x OfficeMax's average ex-GTW. Gross margins in line with Country Stores. Gateway is the leading direct marketer of consumer PCs in the United States, second to Dell worldwide. Gateway's strategy is based on quick time-to-market with new technologies and aggressive pricing. Gateway has succeeded in building a franchise in the consumer and SOHO (small office/home office) markets among technically savvy power users, growing revenues from just over $1 billion in 1992 to $7.5 billion in 1998. Gateway's unit mix is roughly 90% desktops, 9% notebooks and 1% servers. :o) Drew