If you've watched much television lately, perhaps you've seen the Gateway (NYSE:GTW) commercials in which a troop of staffers, carrying boxes bearing Gateway gear, run like crazed animals toward a city situated in an appealing valley. While reasonable people may take issue with the PC maker's portrayal of its fulfillment practices, it seems, nevertheless, that the company's resurgence as a competitive manufacturer and marketer continues.
Last night after the market's close, Gateway raised its low-end Q4 revenue estimate from $975 million to $1 billion. (The high-end estimate stays at $1.025 billion.) That's not massive news -- though it's worth noting that by boosting its operating EPS projections to $0.03 or $0.04 from old numbers at break-even or $0.01, and without markedly changing sales estimates, the company may soothe some of the investor concerns about margin pressure it invited in its Q3 financial results announcement, which was covered by fellow Fool Phil Wohl.
Gateway will enter 2005 in an interesting position. For one, it's a decidedly different company than it was at the end of 2003: It's let workers go, closed on the purchase of value PC maker eMachines, ended a go-nowhere deal with Time Warner's (NYSE:TWX) America Online, and excused itself from the retail business. The list of products now expected to emanate from the factories of PC makers Dell (NASDAQ:DELL), Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ) and others, meanwhile, grows increasingly long. (Gateway has evidently eschewed those struggles to battle for PC market share.)
IBM (NYSE:IBM), meanwhile, has left the building. Gateway has rebuilt itself into a credible third banana in the PC business, and that's certainly pleased investors: Just check out its 12-month chart, which scoffs at the S&P 500, for evidence. Further evidence -- in the form of increasing profit margins and sales growth -- would reward their support. With the holidays a key sales period for PC and electronics makers (and Q1 usually not so hot), there's no time like the present.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
