FOR IMMEDIATE RELEASE

GATEWAY 2000 Reports 39% Increase in Shipments

Revenue, earnings post strong year-to-year gains

North Sioux City, S.D., April 24, 1997 - Gateway 2000, Inc. (NYSE: GTW), a global leader in the direct marketing of personal computers, today reported increased revenues and earnings for the quarter ended March 31, 1997. The March quarter was the second most profitable quarter in the history of the company. Strength in international markets, the popularity of the new Intel Pentium ^® processor with MMX^TM technology and solid demand across all segments led to the strong performance over the first three months of 1997.

Gateway 2000 shipped nearly 555,000 PCs during the first quarter, a 39% increase from first quarter 1996 shipments of 400,000. Quarterly revenue was $1.42 billion, a 24% increase from the $1.14 billion recorded a year ago. First quarter net income rose 34% to $67.5 million, or $.86 per share, from $50.5 million, or $.65 per share, in the first quarter of 1996.

"Our first quarter represents another quarter of excellent execution on the part of the company," said Ted Waitt, Chairman and CEO of Gateway 2000. "The introduction of the Pentium processor with MMX technology, the continued healthy demand from our consumer and major account markets and growth in international business enabled us to register a strong quarter. We feel Gateway is well positioned to capitalize on the opportunities that should materialize throughout the year, particularly the excitement associated with new product introductions."

FIRST QUARTER - 1997 BUSINESS REVIEW
· Strong unit demand continued, with shipments up 39% over the first quarter of 1996. International unit shipments increased 63% and shipments of portable products were up 83%.
· Average Unit Prices (AUP) were down 10.5% from the abnormally high levels of the first quarter of 1996, causing sales to grow at a rate slower than the growth in shipments.
· Beginning in 1997, certain expenses related to the fulfillment of parts warranties have been reclassified from selling, general and administrative (SG&A) expenses to cost of goods sold. All historical financial information now conforms with this new presentation format. Gross margins in the quarter were 18.7%, up from 18.6% in the first quarter of 1996, down slightly from the high 19.0% levels of the fourth quarter of 1996.
· In Europe, unit shipments increased 41% in the first quarter over the first quarter of 1996. As a result of a 15% decline in AUP from the first quarter of 1996, sales in the first quarter increased 20% to $177.7 million. Unit shipments in the Asia/Pacific region were up 155% over the first quarter of 1996 and revenues were up 89% to $78.5 million. In total, sales from international operations represented 18% of total company sales, a record high.
· Selling, general and administrative expenses for the quarter increased by 21% over the first quarter of 1996, but as a percentage of revenues dropped to 12.0% from 12.4% in the first quarter of last year. The positive trend is an indication that the company is beginning to leverage the significant infrastructure investments made over the last 18 months.
· Pentium processor with MMX technology systems represented 28% of total global shipments for the quarter as the company continued to lead the market in the introduction of new technology.
· In the Americas, the shift to Microsoft^® Windows NT^® continued to generate momentum as more than 9% of all desktops and 20% of all major account business migrated to Windows NT.

BUSINESS OUTLOOK
The marketplace will continue to be driven by attractive enhancements in features and technology. While April is historically the softest month of the year the company anticipates that this softness will be offset somewhat by the introduction of new products and technology during the remainder of the second quarter and an aggressive expansion into the corporate arena. Revenues for the second quarter are expected to show appreciable growth over the second quarter of 1996 and be up slightly from the quarter just ended.
"The upcoming months will be exciting for our customers," said Waitt. "There are some unbelievable products that will be introduced very soon to our consumer markets and Gateway’s growing list of major accounts. I think the opportunities for Gateway in the second half of the year are as exciting as any time in this industry. I am confident we will continue to attract customers to the direct channel by offering the best values in the business."

Special Note
The above statements include forward-looking statements based on current management expectations. Factors that could cause future results to differ from these expectations include the following: general economic conditions; growth in the personal computer industry; competitive factors and pricing pressures; component supply shortages; and inventory risks due to shifts in market demand. Additional factors are described in the company’s reports filed with the Securities and Exchange Commission.

About Gateway 2000
Gateway 2000 (NYSE: GTW), a Fortune 500 company founded in 1985, is a global leader in the direct marketing of PCs. The company, headquartered in North Sioux City, South Dakota, has manufacturing facilities in the United States, Ireland and Malaysia and employs over 10,000 people worldwide. Gateway 2000Ò products and services consistently win top awards from leading industry publications.

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