While we believe that most of the steps Gateway is taking are necessary and desirable, we do not think that the withdrawal from international markets, especially Europe, is in the company's best long-term interests.
In our opinion, investors should not read this Apple blowup as evidence that PC demand is weak. Apple is, in many ways, a market unto itself.
We think these results are good, in line with our expectations, and think we are set up for a good 4Q,
Our view is that Apple has had very good growth over the past couple of years, largely driven by upgrade cycle to its existing installed base.
We believe Dell will preannounce a miss for the January quarter, most likely within the next two weeks. We also think the company will use the opportunity to lower next year's sales growth outlook from 20 percent to 15-20 percent,
We believe the company will meet its downwardly revised numbers in the third quarter, as well as bless the current fourth-quarter outlook.
We see Europe as an important market for Gateway with lower PC penetration rates and the potential for higher long-term growth rates in the consumer & small business markets than in the U.S..
What I was expecting was a lot of weakness on the gross margin side, but that the revenue line would be reasonably decent. What it looks like here is the whole thing, top to bottom, is going to be quite weak.
Despite some interesting announcements and a solid display of exciting technology, we don't walk away with the sense that the near-to-medium term prospects for the company are any brighter than previously thought.
Apple is, in many ways, a market unto itself. We believe there is a high likelihood that investors will overreact to this news and take down the PC names in sympathy. We would particularly view this as a buying opportunity for Gateway, and to a lesser extent, Compaq and Dell.
