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Friday, November 03, 2006

Gateway's Red Flag (GTW)(HPQ)(DELL)(MSFT)

If anyone has to do well, really well, in the PC business, it is Gateway. It was not to be.

Gateway announced another weak quarter of earnings. The bright spot was that retail sales were up , by an extremely modest 4%. The company's direct sales division saw sales fall 44%.

Gateway's management is motivated. Several funds are trying to break-up or sell the company.

The PC manufactuer reported flat sales of 1.2 million units compared to the same quarter last year.

With a gun to its head, the fact that Gateway could not make headway is probably not a good sign for Dell or Hewlett-Packard. The Wall Street Journal has already reported that prices will be pressured this holiday as the companies try to lure consumers who would like to wait for the release of Microsoft's new Vista OS early next year.

Douglas A. McIntyre can be reached at He does not own shares in companies that he writes about.

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