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

To: Skeeter Bug who wrote (6563)	8/23/1998 10:26:00 PM
From: Kory	Read Replies (3) \| Respond to of 8002

SB: I agree that a lot of people may be in this stock because they assume it will be another Dell, even though Gateway has not come close to Dell's success. And I have said that I would not buy at these levels until the earnings/direction of Gateway become clearer. That being said, I disagree with a couple of your contentions. I don't believe that component prices are firming. In fact, numerous items such as drives, processors, sound cards, etc. continue to be in large oversupply and face continual downward pressure. Would much rather own Gateway than a Western Digital, Creative Labs, or even Intel in these conditions. As such, I am really not that worried about ASP's. In fact, I like to see them come down as Gateways largest market is the home consumer. Lower component cost allows Gateway to reduce ASP's, which can allow Gateway to reach a ever larger share of the U.S. market. And there is a majority still without computers. I am worried about margins, and Gateway just reported record margins for the quarter just ended. Also inventory remained low and cash flow was good. I also don't believe that demand is drying up. It may be slowing somewhat, but the growth rate is still better than 80% of the industries in the U.S. Contrary to most, I like the YourWare and Country store concepts. Just as wombat did not want to use the secure server to send a order in, there will be people who don't want to buy a computer sight unseen. Gateway is spending a lot of money on advertising and promotion to become a household name. Will it pay off? I don't know, but I do like their chances. What don't I like about Gateway? Some of their geographic expansion. But that may be because I am a native North Dakotan. Also, I agree that it is a higher risk industry. Coke will almost assuredly be selling Coke in 30 years. I'm hoping Gateway (and Dell for that matter) will be selling something, but I'm sure it won't look anything like today's hardware. Finally to illustrate the near universal agreement of Gateway's dominance in the PC industry ;-), I actually heard the following joke on my local radio station this week: Did you hear that Gateway is introducing a new "Clinton" computer? Yeah - it has a 3.5" hard drive and no memory. Kory