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

To: D. Swiss who wrote (5813)	4/24/1998 5:11:00 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 8002

Drew, regarding the S&P effect, remember that it can work against you as well. If we do get into a bear market, a lot of money that is sitting in and being added to index funds now will start flowing the other way. The funds will have no choice but to sell GTW along with everything else. Besides, if everyone is buying now just because the index funds have to buy (and you are fighting over the same shares now), who will be left to buy when the funds are full. It is a short-term phenomenon, especially if the mutual fund money flows slow or reverse. As Cramer said on GMA this morning, this is a musical chairs market - money is chasing money around the chairs, but somebody will be left without a chair when the music stops. Regards, Bob

To: D. Swiss who wrote (5813)	4/25/1998 2:46:00 AM
From: NicholasC	Read Replies (2) \| Respond to of 8002

D, Sorry. Disagree. The decrease in PC price is accelerating, more than in the past. I do not believe the PC market is traveling at the normal everyday rate of price decrease. The market is shifting from PC processing power demand to a demand for bandwidth. Although this is a fundamental change that I am sure that will wear-off eventually, we are at the beginning of this cycle. It is going to last. It is going to get worse before it gets better. I believe that average selling price will be changed forever. My math tells me that 1 1/2% gain in margin does not cover a 6% drop in average selling price. I think one is making less in such a case. Maybe my math is no good. I don't get it. I've never heard that being at the end of the supply chain gives one a competitive advantage. As I know of it, suppliers counter selling price by controlling their inventory. As such and as I understand it, suppliers are doing just that. For example, Seagate and other drive makers can charge GTW more if they have control of their own inventory. Therefore, SEG, QNTM, MU, etc. can take to pricing pressure squeeze off of themselves and shift it elsewhere in the chain. I believe that they entered their "squeeze"/inventory overage problem around this time last year and have virtually corrected the problem, now, a year later. As you can see, it can take time to adjust. GTW is entering the squeeze now. When will it end? As far as inventory goes, look at article in Fortune On-Line covering Dell. Dell caries ~250M in inventory. Considered low for the amount of sales they do (12B). Catch is, GTW has ~250M in inventory and, unfortunately, does 6B in sales. As you can surely see, GTW has not mastered inventory management either. Also, all I know of in regards the past, is that being added to an index sometimes(not always) causes a short-term jump in price that does not last. Sure mutual funds will own GTW, they already do. Institutional ownership may go up or down(as certain funds exit based on valuation). And, this is the first time that someone has told me that a stock should sport a permanent higher valuation because it is in the S&P 500. Has anyone else heard of this? Many of the stock forums here on SI have an ongoing fantasy with short-squeezes. Everyone's waiting. It will come ... tomorrow ... soon. I guess that the GTW thread has to have its. How about a long-squeeze - when a stock gets way overvalued in a frenetic market it goes for a sharp drop. Thereafter, poor business conditions in the given stock's core business come out and the stock tanks more. But don't worry; the drop in PC prices is slight sag in the road and they'll only last for this quarter and, then, they'll just go away, disappear. GTW is a real strong company, better than fat CPQ, better than IBM, have more cash and expertise than all of them to skate right through this. They're in the best position, shoulder-to-shoulder with Dell. By the way shorts are often pros and they build there position at the top of a run. So, if GTW is at or near a top, the short interest should be increasing. It's up to the individual to decide whether GTW is at a top. It surely isn't at a bottom. It was pulling back prior to S&P announcement. Do you think that the S&P effect will last forever? For that matter, more than a few days? Thanks for the luck, I can't get enough. See ya. -N