Bear Stearns Slashes Gateway to Underperform

Cites competitors such as Taiwan's Acer and China's Lenovo

Bear Stearns downgraded Gateway (GTW ) to underperform from peer perform, citing the personal computer seller's anemic revenues, operational difficulties, mounting competition, and balance sheet deterioriation.

Analyst Andrew Neff notes concern about escalating competition from technology companies like Taiwan's Acer and China's Lenovo in the US retail market, as well as the strong focus at Palo Alto, Calif-based information technology heavyweight Hewlett-Packard (HPQ ). If Gateway were acquired by an Asian vendor for its US footprint and retail position, he says history has shown that the take-out premiums are low. Gateway's operational and other challenges could dissuade potential buyers. He views $2.30 to $2.40 per share as fair value.

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report.
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