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

To: The Duke of URL© who wrote (5716)	4/4/1998 7:39:00 PM
From: DWW II	Read Replies (2) \| Respond to of 8002

Before I give my words of wisdom, please let me apologize for being crude. You see I am an impulsive individual with a warped sense of humor. Please believe me when I say that I am not trying to offend anyone. I would say if you are a "large block long" at this point and intend to stay in GTW through the quarterly report, if I were you I would put an extra dick in my back pack. When/if GTW comes in 15 cents short, your original organ will turn green and fall off. One hedge against this outcome would be to put an equal dollar amount of money into SnapOn Tools. DWW II

To: The Duke of URL© who wrote (5716)	4/6/1998 7:07:00 PM
From: Terry	Read Replies (1) \| Respond to of 8002

Before I start, I will direct you to my initial post which did warn you that the articles were old. Further, I never presented the information as complete analysis, I just felt that it was information most people were unaware of and should know about so that they may make an informed decision about buying the stock. You can do your own analysis. Now, given that the articles are old, it does not change the fact that they were saying that they will not use ALR again. This segment was the only possible support to ASPs that GTW had. Without ALR ASPs continue to plummet along with PC pricing. Unit growth is not doing much better. Even with PC prices in a death spiral, household penetration has only ticked up a point or two to 41 or 42% depending on who you listen to. (And you can forget about the corporate market as businesses are beginning to focus on DELL, CPQ, HWP and IBM with GTW and their cow logo being a big loser along with their ALR servers.) What drives unit growth? Major new software releases. And what is coming down the pipeline? 1) Win 98 which is being held up by the DOJ and is probably not a "killer app" anyway and 2) NT 5.0 which has been pushed out. So combine limited unit growth with spiraling prices and we get a very unimpressive number for the revenue line. Now, lets look at the margins, many analysts have improved margins in their numbers. Why? Only two possible explanations spring to mind, they expect ALR to work out or they expect the push for add-on sales such as larger monitors and printers to work out. I am skeptical. The company's margins have been trending down for several quarters as DELL's margins have climbed. DELL's margins were higher than GTW's last quarter for the first time in at least several quarters. (I am talking operating margins.) I would expect GTW's margins to continue to fall. With ASPs falling, the only way to maintain margins is for costs to come down. With component prices falling like a stone it was easy last year. The Asian crisis gave a further temporary reprieve as the dollar strengthened against most Asian currencies and made sourcing product from Asia less expensive. Those days are over. Margins will be squeezed as costs firm. Opening the country stores is a pure margin hit as the company has to pay rent and salaries that otherwise it would not have to pay. In addition, I would think that establishing a physical presence in several states would force the company to start collecting sales taxes in those states, which diminishes the mail order advantage. Try that on for starters, if you need more let me know.