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To: Bob Duncan who wrote (23159)	2/15/1999 6:11:00 PM
From: Alomex	Respond to of 213173

From the Motley Fool, for the GTW comparison. fool.com Boring Portfolio readers know that we've been sizing up Gateway (NYSE: GTW) for a while. One of the two leaders in the PC industry direct model, along with Dell Computer (Nasdaq: DELL), Gateway has improved its business over the last year and has shown excellent strategic thinking and execution with its Country Store retail model and the YourWare program. We believe the intrinsic value of Gateway is above $90 per share and that it will continue to outperform the unit growth rate of the industry, due to its richening product mix and tendency to capture second-time PC buyers who usually upgrade the features they purchase. The $1,000 PC trend does not bother us because of two things: 1) It widens the market of people who will make second-time PC purchase decisions down the road; and 2) You can generate good returns on capital selling $1,000 PCs. We will talk about our valuation work on Gateway in future Boring Port reports and on the boards, but our view of what the company has to do to reach what we see as its intrinsic value right now is actually under consensus expectations for this year. So the valuation difference we see lies in the out-years of people's expectations. Namely, the expectations built into the price of Gateway are that the PC industry or Gateway will drop off a cliff in a few years. While we expect that this year will be one of robust growth and that comparing year 2000 performance to 1999 will be difficult, we think in the meantime that the company's price will reflect its intrinsic value. In other words, we don't need a smooth growth path in every year to appreciate the value the company can generate. One can view Gateway as a commodity producer, which is fine with us. We do think there are commodity elements to the PC industry. But we believe Gateway is one of the most efficient producers in the industry and that the PC industry is still not a mature one. We also think there are non-commodity elements to Gateway, such as the innovative retail strategies the company has come up with and its richening product and customer mix. We are looking at appreciation above 30% itself just to get to intrinsic value, plus at least 15% yearly return to shareholders over an appreciable time horizon. This more than meets our investment principles. We will therefore acquire at least $7,000 of Gateway over the next five days. We will finance part of the purchase with the sale of our entire interest in Pentair (NYSE: PNR). The comparisons in the value and market growth opportunities between the two companies heavily favor Gateway. We like Pentair, but we could better use the capital elsewhere.

To: Bob Duncan who wrote (23159)	2/15/1999 10:56:00 PM
From: nommedeguerre	Read Replies (1) \| Respond to of 213173

Bob, >>It says that the iMac appeals to a 2 1/2 year old girl. That is all. Try not to read too much into it. It is a good first step, but I would be more impressed if the ads appealed to ADULTS. Any idea who that Go2Net! ad with the flying rocket-kid is designed to appeal to? Which ad do you think was more mature? Every ad is geared towards a 2 1/2 year-old as far as I can see. The whole purpose of working your ass off through adulthood is to buy the toys you wanted as a kid. The man who rushes out to get the latest greatest computer is nothing more than a kid in a candy-store with a roll of quarters. I'm as guilty sometimes as the rest and find ALL AMERICAN advertising insulting to the intelligence. Cheers, Norm