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I have always thought that those Gateway stores would be the downfall of
Gateway. PCs are too cheap and margins are way, way, way too thin to
support something like that. CompUSA and MicroCenter are barely staying in
business and they sell everything else you could want in addition to dirt
cheap PCs. IBM stores didn't work when the PCs first came out. Apple
stores didn't make it and atleast Apple has some brand differentiation.
Fleckenstein recently did a separate piece studying the lastest earnings
report from GTW and it wasn't pretty. To top things off, they have quit
giving the street the number of units they sell each quarter, which everyone
other PC company does, they refuse to give same store sales like every
retail company out there does, and (this one is really great) their CFO is
the same guy who financially managed Boston Chicken into the ground. My
bet, GTW will be a memory by 2002, good economy or not.
Kent
-----Original Message-----
From: BobR <bobrabcd@xxxxxxxxxxxxx>
To: realtraders@xxxxxxxxxxx <realtraders@xxxxxxxxxxx>
Date: Thursday, November 30, 2000 4:55 AM
Subject: [RT] General - Gateway's mistake?
A year ago my sister was in the market for a desktop PC so we made a visit
to the Palm Desert, CA mall that had a Best Buy and a Gateway brick and
mortar outlet. Having left the Best Buy because of insulting and
inattentive salespersons we then entered the store with the cowhide style
boxes. I had never been inside one before, the store not the box, and was
duly impressed with the spacious floor layout and knowledgeable, polite
sales people. First impressions were, wow, what a nice store. Then came
the sticker shock. Then came the observation that no customers were at the
cash register. Infact the store had five times(hyperboli) as many
salespeople as customers. A few kids were playing games but the other
display tables had only computers and no customers. This was on a busy
Saturday. At that time I wondered how such a store could be justified in
that it must be a drain on the balance sheet. I wondered how many cowhide
boxes would have to be sold to justify keeping the store open. In the end
price won out and non of the positives about the store were convincing
enough to visit the cash register. As we exited the front door I had this
feeling I had just been to an expensive auto show room. Perhaps they should
have remained a mail order / internet sales company.
bobr
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