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            B R E A K F A S T   W I T H   T H E   F O O L
                     Friday, October 13, 2000

benjamin.rogers@enron.com
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talking is waiting." -- Fran Lebowitz


GATEWAY BUSTS OUT WITH STRONG Q3
The personal computer maker reported third-quarter earnings
after the close yesterday, reaffirming its beyond-the-box
strategy.

By Mike Trigg

Personal computer (PC) maker Gateway (NYSE: GTW) announced
earnings in line with Street expectations after the market's
close yesterday, citing strong consumer and small business sales
and continued growth in Europe. After warnings from stalwart
technology firms Intel (Nasdaq: INTC), Dell (Nasdaq: DELL), and
Apple (Nasdaq: AAPL) sent PC stocks tumbling in recent weeks,
the news was an affirmation of the company's beyond-the-box
business strategy.

Gateway reported fiscal third-quarter (ended September 30) net
income of $152.6 million, or $0.46 per share, compared to $113.2
million, or $0.35 per share, one year ago. A quick look at
profits shows this was its third consecutive quarter of 30%-plus
net income growth.

On the revenue side, the San Diego, Ca. company reported sales
of $2.53 billion, an increase of 16% from $2.18 billion in the
same period a year ago. As a percentage of sales, gross margins
improved one percentage point from the year-ago period to 23.1%.
Here, we begin to see the effect of the company's strategy of
diversifying its product offering.

More than 50% of sales from the quarter came from hardware,
software, and services other than the PC. This exceeded company
expectations, which called for 45% by the end of the fourth
quarter. By gaining traction with its beyond-the-box strategy,
the company sets itself up for further margin expansion. Non-PC
products and services are high-margin businesses, thus allowing
a greater proportion of sales to trickle down to the bottom
line. CFO John Todd discussed this subject in the conference
call last night, noting the company sees a day when the majority
of revenues come from products and services outside the box.

Internationally, revenues in the Middle East, Europe, and Africa
increased 13%. The company indicated that, without currency
difficulties, top-line growth would have seen a 27%
year-over-year improvement. Moreover, Gateway's Asia Pacific arm
saw an 8% growth in revenue and was adversely affected by
problems with suppliers of disk drives, which have since been
solved.

This quarter was especially good for Gateway. Next quarter is
typically its strongest, and the company is comfortable with the
consensus estimate calling for 48% profit growth. The consumer
segment and software revenue related to the PC will continue to
drive growth in coming quarters
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NEWS TO GO

Internet router provider Juniper Networks (Nasdaq: JNPR)
announced fiscal third-quarter net income of $58.2 million, or
$0.17 per share, compared to a loss of $1.6 million, or $0.01
per share, year-over-year. The Street consensus called for the
company to earn $0.09 per share. Revenue was $201.2 million, a
78% sequential increase. CEO Scott Kriens cited strong demand
among service providers to handle the increased amount of
Internet traffic. The company directly competes with Cisco
(Nasdaq: CSCO) and is gaining serious market traction in the
space, which apparently hasn't been affected by the technology
slowdown.

Data availability software provider Veritas (Nasdaq: VRTS)
reported better-than-expected earnings after the market's close
yesterday, citing continued international strength, steady
revenue, and market share growth in the Windows NT space, and
expansion of its Unix business. Veritas' fiscal third-quarter
net income excluding adjustments was $70.3 million, or $0.16 per
share, compared to $38.9 million, or $0.09 per share, a year
ago. The Street consensus called for the company to earn $0.14
per share. CFO Ken Lonchar added in a prepared release that the
company continues to see strong growth of its Hewlett-Packard
(NYSE: HWP) business.

Internet advertising company DoubleClick (Nasdaq: DCLK)
announced third-quarter earnings after the close yesterday in
line with Street expectations. The company's net income totaled
$3.7 million, or $0.03 per share, versus a loss of $3.8 million,
or $0.03 per share, in the year-ago period. Revenues were $135.2
million, compared to $75.3 million. Specifically, the media unit
reported revenue of $64.3 million, an 86% increase. The number
of advertisers fell 10% from the prior quarter. Moreover, it
maintained a bearish outlook for the rest of the year, adding
that current conditions likely won't change till the second
quarter of next year.

Communications chip maker PMC-Sierra (Nasdaq: PMCS) reported
that fiscal third-quarter profits had tripled, citing strong
sales to makers of computer networking gear. The company also
forecasted that sales would rise 15% in the next period. Net
income excluding onetime items was $56 million, or $0.31 per
share, compared to $18.7 million, or $0.11 per share,
year-over-year. The Street consensus called for $0.26 per share.
Revenue came in at $198.1 million versus the year-ago figure of
$82.5 million. The company added a number of acquisitions in
order to expand its broadband and communications expertise and
serve larger markets this quarter. Purchases include Malleable
Technologies, Quantum Effect Devices, and Datum Telegraphic.

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CEO Rick Gilbert tells the Fool how Copper Mountain Networks'
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Internet access to their customers.
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