GTW

[basonista]

A little GTW update...

GTW broke out of it's inverse head and shoulders formation last week putting a price target of $2.80 in play.  It then came back down to test the breakout area and is sitting there right now.

As can be seen on the longer term chart, this breakout looks to be a definite change in trend with last week's high being the highest printed in 7-8 months.  I'm not sure I'm ready to play the computer manufacturers yet but GTW, Dell and others should start coming around sometime soon with the launch of the public version of Vista to happen soon.  If this breakout is for real, a $2.80 price target is a nice 37% gain from here.

[basonista]

For any short-term traders out there - GTW broke out of a bull flag this morning and is retesting the previous breakout area around 2.10 and looks to be forming an inverse head and shoulders pattern on the 30 minute chart.  Buy point is a move above the descending green line connecting the 2 peaks or a more secure confirmation above the higher peak above 2.18.

[la-onda]

update:
Gateway initiated with "buy"

Friday, January 05, 2007 11:40:43 AM ET
WR Hambrecht + Co
NEW YORK, January 5 (newratings.com) - Analysts at WR Hambrecht initiate coverage of Gateway Inc (GTW.NYS) with a "buy" rating.
The target price is set to $2.70.

chart:

[Miguel007]

is one of my top picks for 2007.

[wrangler]

GTW : breaking out,,should pass major resistance tomorrow of 2.25 with no resistance from above. Target 2.32. Made golden crossover three days ago with RSI and MACD heading up. Three day strong accumulation with 2 x ADV traded today.

[Keichi]

updated chart

[wrangler]

updated chart

Nice chart Keichi
Earnings is around the 1st of Feb. That 2.90 target might be hit by then. I bought in on 12-20-06 @2.11 and have been waiting since then for this breakout.
Goodluck trading

[Keichi]

updated chart

Nice chart Keichi
Earnings is around the 1st of Feb. That 2.90 target might be hit by then. I bought in on 12-20-06 @2.11 and have been waiting since then for this breakout.
Goodluck trading

Thanks Wrangler.
nice close today for GTW.hope to see it break thru 2.26-2.27 tomorrow.
gltu

[David Randolph]

1. Profile

Gateway (GTW) directly and indirectly sells desktop and notebook computers and servers, PC-related products and services that are enabled by or connect with PCs to third-party retailers, consumers, businesses, government agencies and educational institutions.

2. Technical Analysis
2.1. All History Chart



GTW completely collapsed from its 1999 highs of $84. Now trading at $2.25. That doesn't mean it will go higher, but it does mean it is trading on a relatively low point, despite being up 73% from its August lows.

2.2. Medium Term Chart



The stock is now above the 50 days and the 200 days moving averages and both those averages show a positive slope, something that didn't happen since  late 2004. The medium term trend is now bullish.

2.3. Short Term Chart



The short term trend is up and the whole technical picture will be quite bullish if GTW is able to close above $2.26. I don't know if this will happen today or not, but even if it doesn't, there's technical support from the 50 and 200 days moving averages, about 10% below the current share price.

This looks like an ascending triangle ready to breakout.

3. Fundamental Analysis
3.1. Number of Shares Outstanding & Market Cap



This is quite surprising. Given the all history chart, I expected to see heavy dilution over the years, but no, just 1.46% average annual increase in the share count, since the company's IPO in 1993. The market cap went down 5.14% a year, on average, since the IPO.

The current market cap is 371,753,348*$2.25 = $836 M

3.2. Liquidity



Long term debt is $300 M, which doesn't look all that scary for a company selling $4 B a year. The current ratio is low, at 1.23, but, for example, DELL's current ratio is even lower, at 1.03, and I don't see anybody complaining about it.

3.3. Revenues + Gross Margin



Revenues declined by more than 50% since 2000, but the main problem with GTW is the declining gross margin. It has come off from 23% in 2000 to about 7% currently.

But the latest reported quarter, Q3 2006, showed gross margin ticking up by 2.3 percentage points to 8.3%, which can be significant:



3.4. Profits



Ok, this is too much for me, I can't buy this stock, at least, not with the current public information. The trailing earnings multiple for GTW is 56 and the forward multiple is 20.4. This will happen if the company is able to meet optimistic projections.

4. General Overview

I was interested in GTW because of the chart and the very low Price to Sales Ratio of 0.2, but going more in depth I see the stock looks fully valued, because gross margin has been declining over the years (showing the company isn't competitive enough), and the trailing and forward earnings multiple already reflect a future fundamental rebound, which will probably be slow.

This was meant to be a "buy" analysis, but I'm going to cancel it and continue looking for new attractive picks for the Stocks on Fire Portfolio, which deserves only the best

[wrangler]

GTW : breaking out,,should pass major resistance tomorrow of 2.25 with no resistance from above. Target 2.32. Made golden crossover three days ago with RSI and MACD heading up. Three day strong accumulation with 2 x ADV traded today.

Trading plan went as planed. Yesterday I sold half @2.26 and let rest run to see if my target of 2.32 can be hit and sold rest @2.30. Glad I did because end of day was 2.24. Just what I thought it would do at resistance from profit takers like myself did at resistance.
Plan now is to see if it can pull back to support of 2.11 my first entry and get back in for next run before earnings.
Goodluck trading

[setravis]

AP
Gateway's Success in '90s Was Fleeting
Monday August 27, 6:17 pm ET
By Peter Svensson, AP Technology Writer 
Gateway's Trajectory From Startup to PC Giant to Also-Ran


NEW YORK (AP) -- In the 1980s, the small South Dakota business selling computers through catalogs was called Gateway 2000. In 1998, the "2000" no longer sounded as futuristic and the now gigantic company was renamed Gateway Inc.
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But keeping the year in the name wouldn't have been inappropriate, considering Gateway's later fortunes. It's a company that can look to its past for greatness, not the future.

Gateway's acquisition by Taiwanese company Acer Inc. for $710 million, announced Monday, ends its history as an independent company, and to a long period of being the "sick man" of the U.S. personal computer industry.

Gateway started out much the same way as Dell Inc.: young man quits college in the '80s to get into the PC business, which was new at the time. In this case, the young man was 22-year old Ted Waitt, who teamed with his brother Norm and his friend Mike Hammond.

Starting in an Iowa farmhouse in 1985, they sold add-ons for Texas Instruments computers. The Gateway brand of PCs came a few years later, and from then on, growth was swift, fueled by Waitt's marketing savvy and ads that emphasized the company's Midwestern roots, often with images of cows.

In 1991, the company, then based in Sioux City, S.D., started shipping in containers with cow spots. These became iconic along with Waitt's ponytail.

The business model was similar to Dell's. The computers didn't sit on Gateway's shelves, but were built when orders were placed -- a smart move in an industry where a component's value could drop almost by the week.

However, Gateway's customers were mainly consumers, as opposed to Dell, which went for the business market, a difference that has lasted to this day.

In 1993, Gateway went public. It had about 3,000 employees and was valued at $1 billion, making it South Dakota's only Fortune 500 company. It opened a factory in Ireland, and two years later, bought Australia's largest PC maker.

In 1997, Waitt turned down a $7 billion takeover bid from Compaq, now part of Hewlett-Packard Co.

In 1998, Gateway moved from Sioux City to suburban San Diego, one of many headquarters moves. Unfortunately, the company seemed to have as hard a time finding a winning strategy as it did in finding a permanent home base.

The PC business was quickly becoming a commoditized me-too business with numerous players and tiny margins.

Gateway's answer was to try to expand into consumer electronics, including plasma TVs. Moving away from the just-in-time manufacturing model, it opened retail stores.

Neither concept really worked. That problem was compounded, starting in 2001, with the dot-com bust and an attendant industrywide slowing of sales. Gateway went deep into the red, with a 2001 loss of more than $1 billion.

To keep costs in line, Gateway started closing stores, withdrew from overseas markets, and laid off workers.

In 2004, Gateway bought eMachines, a relative newcomer to the PC business. Emachines had just 138 employees, yet Gateway paid $290 million in cash and stock for it, and more or less turned itself into a larger version of eMachines.

Wayne Inouye, the CEO of eMachines, became the new head of Gateway, replacing Waitt, and Gateway adopted eMachines' strategy of selling through big-name retailers such as Best Buy Inc., Circuit City Stores Inc. and Wal-Mart Stores Inc.

Gateway closed its own stores and laid off most of its workers. From 24,600 employees in 2000, Gateway was down to 1,800.

As a leaner company, Gateway was able to stem its losses, but it never came close to regaining the size that would allow it to take on Dell and HP. Its stock price, already down to $5 from above $80 in 1999, started a slow slide toward $1.

In 2006, the founder of eMachines, Lap Shun Hui, came back with an unsolicited $450 million to buy Gateway's retail business. Gateway rejected the offer as too low, but in view of Monday's announcement, it was not far off. The $710 million Acer is paying is a tenth of the offer Compaq made in 1996, without adjusting for inflation.

Gateway history: http://www.gateway.com/about/news--info/company--background.php
_______________________________________________________________

More Offers in the works. 
Suspecting there will be follow up bids, the various Chinese companies have a lot to gain from buying GTW, because they get Packard Bell, too.
Gateway Inc., once one of the highest fliers of the personal-computer industry but in recent years reduced to a niche player, said Monday it would be acquired by Taiwanese PC giant Acer Inc. for $710 million.

52wk Range: 1.13 - 2.44
Volume: 101,086,178 .........
Avg Vol (3m): 5,909,060
Market Cap: 680.03M
P/E (ttm): 29.35
EPS (ttm): 0.06

Technicals
Record Volume
Close Above the 50-day MA
Close Above the 13-day MA
Most Actives
Percentage Gainer

Last Price Quote is:
35.40%above 13-day MA
23.15%above 50-day MA
RS Rating: 50 

Fundamentals
Key Data:
Market Cap (M): $452.11 
P/E Ratio: 21.05 
PEG Ratio: 12.4247 
Next Earnings: 11/08/2007
Last Analyst Rating: Buy