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To: Pravin Kamdar who wrote (13512)	10/12/2000 5:03:10 PM
From: AK2004	Respond to of 275872

Pravin here is an interesting line from pru report (below): continued consumer strength and lower component costs, we believe Gateway shares are well positioned into Q4. I wonder what that might be? :-)) Regards -Albert 07:39pm EDT 11-Oct-00 Prudential Securities (K.ALEXY 212-778-1049) GTW GATEWAY: Expect Company will Deliver Q3 Revenues and Earnings. Reiterate Stron GATEWAY: Expect Company will Deliver Q3 Revenues and Earnings. Reiterate Strong Buy R E S E A R C H N O T E S October 12, 2000 Subject: Gateway (GTW--$44.62-NYSE) OPINION ========= Current: Strong Buy/SBI Analysts: Kimberly Alexy (212) 778-1049 Andrew Saland (212) 778-8591 RISK: High 12-Month Target Price: $92 ============================================================================== Ind. Div.: N/A Yield: N/A Shares: 333.3 mil. 52-Wk.Range: 84-43 ______________________________________________________________________________ EPS FY Year P/E 1Q 2Q 3Q 4Q Actual 12/99 $ 1.33A 33.5X $ 0.31A $ 0.28A $ 0.35A $ 0.42A Current 12/00 $ 1.89E 23.6X $0.41A $0.37A $0.46E $0.65E Current 12/01 $ 2.40E 18.6X ============================================================================ o Tonight after the close, Gateway will report Q3 results. We believe Gateway will deliver consensus revenues of $2.5B or 15% Q/Q and 17% Y/Y growth, marking a significant acceleration of growth over prior 3 quarter trends. We expect earnings will be at least in-line with our and Street consensus estimates of $0.46 per share. o While the quarter was tight and seasonally back-end weighted, we believe consumer sales accelerated throughout quarter-end and that business sales tracked to flat Y/Y growth - an improvement from the 10% decline last quarter and in-line with expectations. o We expect the outlook will be positive and management will reiterate comfort with its Q4 revenue and earnings outlook. With easy compares into Q4, continued consumer strength and lower component costs, we believe Gateway shares are well positioned into Q4. o We maintain that while there have been multiple mixed data points regarding PC demand, we believe some areas of the market including consumer, SMB, US and Asia are generally tracking towards seasonal expectations. We believe demand weakness is limited to Europe (corporate) and US government. o We maintain that both Compaq and Gateway are well positioned to deliver on Q3 expectations and will likely reiterate positive outlooks for Q4. As a result, we believe sentiment on the group may begin to improve. We reiterate our Strong Buy ratings on both names.