Event Brief of Q4 2005 Gateway, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

PARTICIPANTS

. Marlys Johnson, Gateway, Inc., IR . Wayne Inouye, Gateway, Inc., President & CEO . John Goldsberry, Gateway, Inc., SVP & CFO . Richard Gardner, Citigroup, Analyst . Andy Neff, Bear, Stearns & Co., Analyst

. Steven Fortuna, Prudential Equity Group, Analyst . David Bailey, Goldman Sachs, Analyst . Bill Fearnley, FTN Midwest Research, Analyst

OVERVIEW

GTW reported that its 4Q05 revenue came in at $1.124b, up 10% from 3Q05, and 9% from 4Q04. 4Q05 operating income was $12.3m, down from $18.8m in 3Q05, due to margin pressures in Pro, as well as one-time charges in SG&A. With higher other income and a $9.8m tax benefit, 4Q05 net income came in at $22.4m vs. $15.1m in 3Q05. 4Q05 diluted EPS came in at $0.06 vs. $0.04 in 3Q05, but included $0.02 due to tax benefits.

FINANCIAL DATA

A. Key Data From Call 1. 4Q05 revenue = $1.124b. 2. 4Q05 operating income = $12.3m. 3. 4Q05 net income = $22.4m. 4. 4Q05 diluted EPS = $0.06. 5. 4Q05 GM = $86.7m.

PRESENTATION SUMMARY

S1. Business Developments (W.I.) 1. Highlights: 1. GTW continued to put in place the building blocks of its long-term growth strategy. 2. While GTW believes that it continued to lay important

groundwork in 2005 for long-term growth, it was disappointed

by its inability to manage GM in Pro. 1. In 2006, GTW has a number of initiatives in place to address these margin issues.

3. Last year was about re-establishing GTW as a viable brand in

categories that are relevant to the PC market. 1. In 2005, GTW was focused on Professional sales and growing its notebook and monitor segments. 2. The most recent ITC and NPD numbers for 2005 indicates that GTW was a success in notebook and stand-alone monitor growth by any measure. 4. While the performance at Professional fell short of expectations, the number of deals GTW closed last year with significant organizations demonstrated that it has restored a deserved sense of confidence amongst Professional customers. 5. GTW made a lot of progress across the board in 2005,

particularly in domestic and international retail. 6. Successes included the successful launch of desktop and notebooks, PCs, servers, and displays to the praise and acclaim of media reviewers, vendors, and customers. 7. GTW dramatically improved brand consideration.

8. The Co. produced first full-year GAAP profits since 2000. 2. 2006 Expectations: 1. 2006 is all about creating value for shareholders, employees and customers. 1. It's about driving low double-digit increases in revenue and profitability, and growing faster than the market in the key segments of Retail and Professional. 2. On the product front, GTW has some exciting things coming this year. 1. GTW plans to capitalize on major industry innovations, such as Microsoft's next-generation Vista operating system, as well as Intel's Viiv technology. 3. Intel and Microsoft are spending 'hundreds of millions' of dollars to educate the market on these new technologies, and GTW will be among the first PC companies worldwide to offer them to customers across a broad array of segments and geographies. 4. GTW plans a continued focus on increasing share in the rapidly growing mobile computing space across all segments. 5. In 2006, GTW expects to enter in new notebook categories and continue to deliver innovative products, as it did with recent Convertible Notebook in 4Q05. 6. GTW plans to further expand its Professional product line with new, low-cost managed desktop products, and enhanced servers and notebooks. 1. Since the launch of new combined co. in early 2004, GTW has focused its efforts on the client side of the Professional

business. 2. In 2006, GTW plans to continue these efforts with a focus on the server side. 7. GTW plans to build on a rapidly growing position in stand-alone monitors, especially its strong position in Retail. 1. The Co. expects to continue growing its Retail and international business units this year. 8. IT Systems: 1. In support of its efforts, GTW hopes to bring new IT systems online this year. 1. This is expected to help GTW to improve internal business processes, and significantly increases sales productivity. 2. These IT upgrades are expected to allow GTW to rapidly scale on many aspects of Professional business.

3. GTW expects to continue its Box and Beyond initiative, which

involves improving the rate of attached sales of software peripherals and services across all segments. 4. Increasing attached sales is a …