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

To: Mike M2 who wrote (5947)	6/10/1998 11:23:00 AM
From: JCS	Respond to of 8002

Another bricklayer toiling on the wall of worry. I love it.

To: Mike M2 who wrote (5947)	6/10/1998 1:40:00 PM
From: Wayners	Respond to of 8002

SEA is only 6.0% of GTW sales. Last quarter those sales grew 31.5% over 1Q 97. The price drops are resulting from lower componenet prices and GTW is passing on those lower costs to its customers. Margins have actually been increasing. The price drops are not a result of price wars between the box makers. That would be a different story. The U.S. economy is growing faster than economists forecasts. Look at GDP and consumer spending trends. People are seeing real wage gains are spending their disposable income. Consumer confidence is high. Here's the rate of growth of PC sales for GTW: 2Q 96 424,000 PCs sold 3Q 96 474,000 PCs sold 4Q 96 614,000 PCs sold 1Q 97 555,000 PCs sold 2Q 97 554,000 PCs sold 3Q 97 622,000 PCs sold 4Q 97 850,000 PCs sold 1Q 98 767,000 PCs sold Same quarter to quarter growth was 38% (1Q), 31% (2Q), 31% (3Q) and 38% (4Q). I'd expect GTW's PC sales growth to be a minimum of 31% over 2Q 97, so I'd expect GTW to sell a minimum of 726,000 PCs in 2Q 98. I don't see any evidence of a slowdown/saturation looking at GTW's past numbers and don't see it in the future either looking at Asia's small percentage of sales and the really strong U.S. consumer spending. Computers are only in 40% of U.S. homes, there's the natural upgrade cycle and new buyers are coming into the market because PC prices are much more affordable today. The lower prices are not cutting into GTW's margins either. GTW's annualized margins have been increasing. Look at how well retailers are doing these days as they post same stores sales numbers. People are spending. This bodes very well for future GTW sales. GTW also derives a significant portion of its income from non-operating income. Take a look. They make a lot of money from cash and marketable securities on-hand without selling any PCs.