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

To: Kory who wrote (6018)	6/17/1998 8:45:00 AM
From: Wayners	Respond to of 8002

I think the forward looking P/E is in line with the growth rate. I don't pay any attention to trailing P/Es. They don't mean anything. GTW is opening a lot more of their country stores. Last quarter they credited the stores with an unexpected boost to revenue and earnings. I'd expect to see that played out in the future. They have opened less than a hundred stores and are planning to open several hundred. The "your ware" program will increase margins as I saw in a press release. On a typical PC they said that margins are around $200 while on a your ware it will be around $400. These two items are the "story" (as Peter Lynch would call it) that will make the stock price of GTW go up. I'm discounting the effect of Asia thus far because GTW only gets 6% of sales from that region. Not only that, inspite of the Asia crisis their sales and Dell's sales grew at a rapid pace in that region. As far as margins go, these guys aren't dumb. You don't cut prices to cut into margins in an already low margin business. While ASPs decline as they pass along savings from component makers, they are not cutting into margins.