Look at the chart of Gateway Inc., and you might conclude that the personal computer is dead. You'd be wrong, of course, but shares of the fourth-largest PC-maker in the U.S. have definitely taken a beating.

Gateway's stock is down more than 60% since the beginning of 2002, as the company continues to slash prices and contend with soft demand. Gateway's earnings have been in the red since 2001, when the recession hit hardest. But management is scrambling to rein in costs, through downsizing and restructuring, and ultimately reclaim market share from competitors like Dell and Hewlett-Packard.

At less than $3 a share, it doesn't seem like Gateway has much further to fall. There have been rumblings on Wall Street that the direct-marketing PC maker might go private or put itself on the block. But CEO Ted Waitt recently put the kibosh on those rumors.

Gateway has no long-term debt and loads of cash on the books -- $3.17 per share in the most recent quarter -- so bankruptcy isn't likely in the offing, either. Meanwhile, Gateway has dramatically narrowed its losses. It sells at a mere 0.2 times the $4.5 billion in sales it made in the past 12 months.

Those are the qualities that make Gateway one of the "amazingly cheap" favorites of Stan Majcher, manager Hotchkis & Wiley Midcap Value fund (for more, see "Amazingly Cheap Stocks"). Majcher says investors are paying very little for the business and that the stock will rebound when PC demand picks up in the next year or two.

-- Elizabeth Frengel

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