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

To: PeterR1700 who wrote (4515)	11/2/1997 4:40:00 PM
From: Neil_L	Read Replies (3) \| Respond to of 8002

Cramers view on GTW: Msueng asks: witch do you think is the better short term but SEG or GTW? Jim Cramer: They are both bad in my book Full transcript at: chat.yahoo.com Happy trading, Neil.

To: PeterR1700 who wrote (4515)	11/2/1997 6:18:00 PM
From: Sid Turtlman	Read Replies (3) \| Respond to of 8002

PeterR1700: First, despite all the experience, I am still wrong a lot, so feel free to ignore my opinion. That said, I am long term very bearish on GTW because in the long run companies only make money when they have some exclusive value to add. When only DELL and GTW could sell you a custom made box mail order at prices below what you would pay in the local store, they were doing something people were willing to pay them a profit to do. When CPQ, NEC (company, not symbol), Fujitsu, and CompUSA come into the direct sales market, and the various indirect sellers cut their costs drastically, what GTW does is no longer needed as much. So what is left? Does GTW have brilliant, unique, design? No - it spends pennies on R&D. Are its costs lower than competition - not really. How much extra will people pay to have a cow on the box? Not much. All GTW does is buy parts and put them in boxes. Anyone can do that and, by selling direct, more people are doing it the same way GTW does. The whole concept of custom assembly starts making less sense when you get to lower price points anyway, which is where the market is going. On top of all this, some competitors are makers of components who earn their profit there; selling boxes to NEC is just a way of moving more monitors and chips. Selling boxes to CompUSA is a way of getting people to sign up for lucrative maintenance contracts. It is tough to earn a margin competing with those who are willing to make nothing. What all this means is that supply is converging with demand. Any slowdown in demand puts GTW into the red. Rising demand will at least allow it to make nothing. When the day comes that GTW has something truly unique, if ever, then it will be able to make money again.