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

To: Tao who wrote (5806)	4/24/1998 7:39:00 AM
From: Ramsey Su	Read Replies (1) \| Respond to of 8002

A true Taoist would not care whether one is above or underwater, because what is water, right? Seriously, GTW is interesting. Because of a few disastrous qtrs last yr and depending which PE (trailing, forward, 2past/2 forward qtr,etc) you are looking at, the numbers are distorted. I know some services claimed that GTW has a PE of over 50, which is clearly erroneous or meaningless. Zacks's FY 1998 est is $2.16 and they are on course to meet that. Unit sales growth is a worthless number, revenue growth and earnings growth are more important. A 12% earnings growth is not even keeping pace with the industry, so it is questionable whether their PE deserves any premium over their growth rate. Zacks' concensus growth rate estimate at this time is 23%, giving GTW a value of 46ish. Even if you accept the generous growth rate of 23%, GTW is already trading at 1999 value. Looking forward, this is the qtr that GTW ran into trouble last year. Is this yr going to be a repeat? Highly possible. First, they are moving from one SD to another SD. San Diego is quite different from South Dakota. This move is bound to be expensive and disruptive to a business that JIT/BTO efficiency is measured by the seconds. Secondly, the PC business, as IBM and CPQ disclosed with their earnings report this qtr, is very unfavorable. GTW have no lead in neither the high nor low end. They may be stuck in between somewhere. I was lucky yesterday and covered 2/3 of my short position at 53. With the artificial boost by the S&P500, it is a great opportunity for current shareholders to take profit and a chance for me to short them again. It will be very interesting watching the ticker today and the next few days to see when the bigger block trading stops. Just my 2 cents. Ramsey