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

To: yard_man who wrote (7066)	2/24/1999 1:02:00 PM
From: NW Bronco Fan	Read Replies (1) \| Respond to of 8002

They're just trying to beat the others to the punch and sell a few PC's before the real offers hit. The offers like the cell phone. Sign up for the service and get the PC free. They absolutely have to do something different, because people will not be paying for PC's in the near future. Corporations might, but GTW isn't strong in that area.

To: yard_man who wrote (7066)	2/24/1999 2:58:00 PM
From: NW Bronco Fan	Read Replies (2) \| Respond to of 8002

GTW may also run into accounting problems with this new promotion. If they sell a PC, let's say for $1500 and it comes with a year of free internet access, then wouldn't they have to defer a portion of the revenue from the sale and recognize it over the 12 month free internet access period? If that's the case, and they charge $20 per month for this service to anyone else, then they would need to defer $240 up front and recognize it over the year of free service. So if the PC they sold costs them $1200 (20% margin), then their initial margin on the PC is really cut to $50 with the rest of the margin being added over the following year. I guess they could defer a portion of the COGS as well, but the total COGS would need to be figured by adding the PC cost with the internet access cost, then deferring the internet access cost with the revenue and bringing both back into revenue and COGS over the following year. GTW just seems like a company that will have some accounting nightmares that are going to create all kinds of problems for them. This just might be the year of the mad cow.