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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


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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

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