If you can't stomach Gateway's (NYSE:GTW) revised 2005 results, see whether one of its original cow-patched boxes can lend you one of its four stomachs. In reality, the markdown isn't as severe as it may seem.

Yes, the company is revising its full-year financials. Instead of earning $49.5 million -- or $0.13 a share -- last year, Gateway will now be recording a profit of just $0.02 a share for 2005. Last night's takedown was due to a pair of charges. The first item involves a legal settlement with Hewlett-Packard (NYSE:HPQ) that will now find the companies cross-licensing each other's patent portfolio. The second charge relates to Gateway beefing up its sales, income, and franchise tax reserves because of an unfavorable court ruling in a similar case that is likely to lead to a widening of the company's tax liability.

In the end, Gateway can still claim to have posted its first annual profit in five years. The charges don't change the company's fundamentals. More importantly, the challenges remain the same as well.

Since its acquisition of eMachines two years ago, Gateway has been able to grow its retail business. Yes, I'm talking about organic growth, too. This past quarter, Gateway moved 13% more units than it did in the holiday quarter of 2004, with eMachines serving as a part of the Gateway family in both periods.

However, the one troubling aspect of scooping up eMachines is that making a bold move into the discount retail market has hurt the brand in its corporate and direct-selling operations. That's important because it's where the higher margins can be found.

Maintaining profitability -- and greenery -- is important to Gateway, since the shares aren't trading for a whole lot more than the $1.43 in cash that the company had at the end of December. The company may never approach market leaders Dell (NASDAQ:DELL) or HP in this market, but it's got a fighting chance as long as there's money in the bank.

Things will get interesting later this year when Microsoft (NASDAQ:MSFT) rolls out its new Vista operating system. A new version of Windows is often just the ticket to get computer users to upgrade their systems. This may not be a big issue in the corporate market, but it's a key factor in moving the low-priced entry-level desktop systems where Gateway is feasting these days.

Yes, the grass is always greener at the other side of the Microsoft release. It's why the Gateway farmland cows may be grazing merrily, knowing that they can stomach the bad news four times over.

Dell and Microsoft are Inside Value picks. Dell is also a Stock Advisor selection.

Longtime Fool contributor Rick Munarriz does have a pair of Gateways in his house, though he favors working on his HP computer and Dell monitor. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy . Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.