No. of Recommendations: 0
Warning: long post ahead!
I am posting my analysis of the Gateway Corporation
below. I have used Dell, Compaq, and IBM as their
major competitors. One could argue that Hewlett-
Packard should be included as well, but I really
couldn't see not including any of the other
three. Since DELL scored fairly well on my previous
analysis, I figured I would reverse the numbers and
rerun everything from GTW's perspective. Needless to
say, I was quite surprised. As a DELL shareholder, I
assumed that DELL would blow GTW away, and that just
wasn't the case. I still think DELL's future is
brighter than than GTW's, but that is another story
for another day. In any event, here are the numbers
according to me:
Financial AnalysiCompany Being Evaluated Competitor #1 Competitor #2 Competitor #3
Gateway Dell Compaq IBM
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
1998 1997 Growth 9mth - 11/98 1998 1998
Income Statement . . .
Sales 7,468 6,294 18.7% 13,070 31,169 81,667
Cost of Goods S 5,922 5,217 13.5% 10,125 23,980 50,795
Net Income 346 110 214.5% 1,035 (2,743) 6,328
Shares Outstand 159 156 1.9%
Balance Sheet . . .
Cash & Equivale 1,328 632 110.1% 2,797 4,091 5,768
Current Assets 2,228 2,039 9.3% 5,915 15,167 42,360
Short-term Debt 11 14 -21.4% 0 0 13,905
Current Liabili 1,430 1,004 42.4% 3,658 10,733 36,827
Long-term Debt 3 7 -57.1% 512 0 15,508
1 1 1
Margins & Ratios . . . Competitors' Average
Gross Margins 20.7% 17.1% 3.6 22.5% 23.1% 37.8% 27.8%
Net Margins 4.6% 1.7% 2.9 7.9% -8.8% 7.7% 2.3%
Cash-to-Debt 94.86 30.10 215.2% 5.46 No Debt! 0.20 0.42
Net Cash 1314.0 611.0 115.1% 2285.0 4091.0 -23645.0 -5756.3
Fool Flow Ratio 0.63 1.42 -55.4% 0.85 1.03 1.60 1.16
Continue Here
Ranking Rule Makers
1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 3
Openness 1 Gross Margins 3
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstandin 2
Inevitability 1 Cash-to-Debt 2
Solitariness 0 Fool Flow Ratio 3
Humor 1 Expansion Potenti 2
Subtotal 6 Subtotal 18
2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 0 Gross Margins 0
Gross Margins 0 Net Margins 2
Net Margins 0 Net Cash 4
Cash-to-Debt 2 Fool Flow Ratio 4
Fool Flow Ratio 2 Convenience 2
Your Interest 2 Subtotal 12
Subtotal 6
5) Your Enjoymen 1
Total Score 43 Second Tier
Feel free to offer up your comments.
Fool On!
the LanceMan
