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

To: James Choi who wrote (4964)	12/7/1997 2:46:00 PM
From: DWW II	Read Replies (4) \| Respond to of 8002

James, I always like to preface my comments with some sort of caution as we are playing with real $ here. My best guess and gut feelings......are... If...If....I were Ted Waitt and I had to clean house because of circumstances that have piled up over a recient period of time, I would do it all in one Qtr and have it over with. I guess that is obvious to everyone. So, what are the things that have piled up to damaged the profitability of the company last qtr.? One was the $100,000,000 manufacturing software package that they purchased that was suppose to make their Mfg processes more efficient. It did not work. (Can you imagine a computer savvy company spending 100 million dollars on a mfg. software package that was crap .....dumb shits). Two....target the "corporate market" and have the audacity to build major inventories of components in anticipation of success. As if all GTW had to do is declare that.... "hey, we are now in the corporate mkt. so everyone can now start to purchase from us". James, you know the dynamics that make DELL so successful involve paying attention to inventory control and major attention to cash flow. Combine that with component pricing falling faster than anyone would have imagined... (especially in the "major component" arena...CHIPS from INTC) and you have the makings of a real mess. Also, We all know about HWP, IBM, CPQ & DELL mkt share. All of these companies sell in Asia. GTW says they do, but they do not. That is to say that,..... they say that because it sounds good, just like it sounds good to say that they sell in the corporate mkt. GTW has no market share in Asia. The way GTW will get hurt by Asia is by the fact that the big 4 will need to take mkt share away here in the U.S. to maintain groth. I do not know if it is legal to "write down" the value of "obsolete" inventories, but if it is he (Ted) would do it. ("Obsolete" in terms of $ value). By this I mean, that if the value of components were "over-valued" because the same parts were available at a lower price at a later date, it may be legal to re-value the inventory to a lower price. If that were done, then the qtr that they were writen down would look very bad, and then it follows that the profit made in the future would be greater because of this inventory re-evaluation. The IRS would make sure that that would be the case. So....show a loss in one qtr...O K .....but show it back again in the next qtr. The IRS is funny that way. So, Ted tells his 6000 closest friends and his family to....."get out for a qtr. and get back in later". He would not say that to anyone publicly as that would be a violation of XXXX rules, but............... So,Dump the 100 Mil. software pkg on the IRS, clean out inventory dollar value and that is why the last qtr was so bad. This qtr will roar back.....in my opinion. Then get out. I am getting out early 98' and Waitt to see what happens. DWW II