SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549

                           FORM 10-Q

{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended September 30, 1997
                               OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
    For the transition period from    to

             Commission file number     0-22784

                       GATEWAY 2000, INC.
     (Exact name of registrant as specified in its charter)

            Delaware                      42-1249184
(State or other jurisdiction of        (I.R.S. Employer
 incorporation or organization)      Identification No.)

                       610 Gateway Drive
                         P.O. Box 2000
              North Sioux City, South Dakota 57049
       (Address of principal executive offices, zip code)

Registrant's telephone number, including area code: (605) 232-20
00


      Indicate by check mark whether the registrant (1) has filed
all  reports required to be filed by Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes          No           .

     As of November 6, 1997, there were 154,065,157 shares of the
Common   Stock  of  the  Company,  $.01  par  value  per   share,
outstanding.  As of November 6, 1997, there were no shares of the
Company's  Class  A  Common  Stock, $.01  par  value  per  share,
outstanding.
                                        
                                        
                                
                                        
                                        
                                        

                            I.  FINANCIAL INFORMATION

        Item 1. Financial Statements

<TABLE>
<CAPTION>
                               Gateway 2000, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
         For the three and nine months ended September 30, 1996 and 1997
                    (in thousands, except per share amounts)
                                   (Unaudited)


                                        Three Months Ended September 30, Nine Months Ended September 30,
                                              1996             1997           1996            1997
                                                                                         
     <S>                                <C>               <C>            <C>             <C>
     Net Sales                          $ 1,202,933       $ 1,504,851    $ 3,482,398     $ 4,316,845
     Cost of goods sold                     979,555         1,309,601      2,840,518       3,595,444
        Gross profit                        223,378           195,250        641,880         721,401
     Selling, general and                   135,621           219,258        412,820         570,680
     administrative expenses
     Nonrecurring expenses                         -          113,842                -       113,842
        Operating income (loss)              87,757          (137,850)       229,060          36,879
     Other income, net                        6,087             5,612         19,086          20,195
        Income (loss) before income          93,844          (132,238)       248,146          57,074
     taxes
                                                                                         
     Provision (benefit) for income          33,148           (25,125)        85,610          40,187
     taxes
        Net income (loss)               $    60,696       $  (107,113)   $   162,536     $    16,887
                                                                                         
     Share and per share information:                                                    
           Net income (loss) per share  $      0.39       $     (0.68)   $      1.04     $   0.11
           Weighted average shares          156,276           156,875        155,945      156,373
     outstanding
</TABLE>

<TABLE>
<CAPTION>


                               Gateway 2000, Inc.
                           CONSOLIDATED BALANCE SHEETS
                    December 31, 1996 and September 30, 1997
               (in thousands, except share and per share amounts)
                                   (Unaudited)
                                        
                                        
                                                         December 31,            September 30,
                                                             1996                     1997
  <S>                                               <C>                      <C>                 
  ASSETS                                                                     
  Current assets:                                                            
     Cash and cash equivalents                      $    516,360             $    273,987
     Marketable securities                                     -                   21,403
     Accounts receivable, net                            449,723                  492,660
     Inventory                                           278,043                  376,648
     Other                                                74,216                  165,378
        Total current assets                           1,318,342                1,330,076
  Property, plant and equipment, net                     242,365                  311,269
  Software costs, net                                     77,073                   39,965
  Intangibles, net                                         9,869                   87,350
  Other assets                                            25,762                   63,971
                                                    $  1,673,411             $  1,832,631
                                                                             
  LIABILITIES AND STOCKHOLDERS' EQUITY                                       
  Current liabilities:                                                       
     Notes payable and current maturities of        $     15,041             $     12,997
  long-term obligations
     Accounts payable                                    411,788                  462,286
     Accrued liabilities                                 190,762                  235,234
     Accrued royalties payable                           125,270                  130,362
     Income taxes payable                                 40,334                   15,029
     Other current liabilities                            16,574                   28,210
       Total current liabilities                         799,769                  884,118
  Long Term obligations, net of current maturities         7,244                    5,741
  Warranty and other liabilities                          50,857                  101,912
         Total liabilities                               857,870                  991,771
                                                                             
  Contingencies (Note 9)                                                     
                                                                             
  Stockholders' equity:                                                      
     Preferred Stock, $.01 par value, 5,000,000                -                        -
  shares authorized; none issued and
  outstanding
     Class A Common Stock, nonvoting, $.01 par                 -                        -
  value, 1,000,000 shares authorized; none
  issued and outstanding
     Common Stock, $.01 par value, 220,000,000                               
  shares authorized; 153,511,968 shares and                                  
  154,057,207 shares issued and outstanding,                                 
  in 1996 and 1997 respectively                            1,535                    1,541
     Additional paid-in capital                          288,745                  298,363
     Cumulative translation adjustment                       549                    (745)
     Unrealized gain on available-for-sale                                   
  securities                                                   -                      102
     Retained earnings                                   524,712                  541,599
        Total stockholders' equity                       815,541                  840,860
                                                    $  1,673,411             $  1,832,631
</TABLE>

<TABLE>
<CAPTION>                                                                             
                                        
                                        
                               Gateway 2000, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the nine months ended September 30, 1996 and 1997
                                 (in thousands)
                                   (Unaudited)
                                        
                                                             Nine Months Ended
September 30,
                                                         1996                       1997
  <S>                                             <C>                        <C> 
  Cash flows from operating activities:                                      
     Net income                                   $    162,536               $     16,887
     Adjustments to reconcile net income to net                              
  cash provided by (used in) operating
  activities:
     Depreciation and amortization                      41,844                     63,268
     Provision for uncollectible accounts               13,760                      2,422
  receivable
     Deferred income taxes                               6,148                    (63,749)
     Other, net                                          2,034                        256
     Nonrecurring items                                      -                    113,842
     Changes in operating assets and liabilities:                            
        Accounts receivable                            (10,058)                   (20,665)
        Inventory                                       (1,476)                   (83,524)
        Other current assets                            (4,928)                   (63,679)
        Accounts payable                                99,123                     41,891
        Accrued liabilities                             11,410                     12,184
        Accrued royalties                               (8,796)                     5,092
        Customer prepayments                            (7,141)                    (1,251)
        Income taxes payable                            12,288                    (29,297)
        Other liabilities                               21,335                     36,894
           Net cash provided by operating              338,079                     30,571
  activities
  Cash flows from investing activities:                                      
     Capital expenditures                             (79,564)                    (94,094)
     Software costs, internal use                     (22,615)                    (11,130)
     Purchases of available-for-sale securities             -                     (32,286)
                                                                             
     Proceeds from maturities of available-for-             -                       8,985
  sale securities
     Proceeds from sales of available-for-sale                               
  securities                                                -                       2,000
     Payment received on note                            5,000                          -
     Acquisitions, net of cash acquired                     -                    (142,320)
     Other, net                                         (4,739)                    (2,944)
        Net cash used in investing activities         (101,918)                  (271,789)
  Cash flows from financing activities:                                      
     Proceeds from issuance of notes payable            10,297                     10,000
     Principal payments on long-term obligations                             
  and notes payable                                    (12,543)                   (13,972)
     Stock options exercised                             1,780                      5,171
        Net cash provided by (used in) financing                             
  activities                                              (466)                     1,199
  Foreign exchange effect on cash and cash                                   
  equivalents                                             (966)                    (2,354)
  Net increase (decrease) in cash and cash                                   
  equivalents                                           234,729                  (242,373)
  Cash and cash equivalents, beginning of period        166,397                   516,360
  Cash and cash equivalents, end of period        $     401,126              $    273,987
</TABLE>
                                                                             





1. General:

        The    accompanying   unaudited   consolidated   financial    statements
of   Gateway   2000,  Inc.  (the  Company)  as  of  September  30,   1997   have
been    prepared    on   the   same   basis   as   the   audited    consolidated
financial   statements   for   the  year  ended  December   31,   1996,   except
as   follows.    Beginning   in   1997,  certain   expenses   related   to   the
fulfillment    of    parts    warranties    have    been    reclassified    from
selling,    general   and   administrative   expenses   to   cost    of    goods
sold.    Prior   year   amounts  have  been  restated  to  conform   with   this
reclassification.     In    the   opinion   of   management,    the    unaudited
consolidated    financial    statements    as    of    September    30,     1997
reflect     all     adjustments    necessary     to     fairly     state     the
consolidated   financial   position,   and   the   consolidated    results    of
operations     and    cash    flows    for    the    interim    period.      All
adjustments   are   of   a   normal,   recurring   nature,   except   for    the
nonrecurring   expenses   described  below  in   Note   2.   The   results   for
the   interim   period   are   not  necessarily   indicative   of   results   to
be   expected   for   any   other   interim   period   or   the   entire   year.
These   financial   statements  should  be  read   in   conjunction   with   the
Company's    audited    consolidated    financial    statements    and     notes
thereto   for   the   year  ended  December  31,  1996,   which   are   included
in    the    Company's    1996   Annual   Report   to   the    Securities    and
Exchange    Commission    on    Form   10-K.     The    preparation    of    the
consolidated    financial    statements    in    conformity    with    generally
accepted     accounting    principles    requires     management     to     make
estimates    and   assumptions   that   affect   the   reported    amounts    of
assets    and    liabilities,    disclosure    of    contingent    assets    and
liabilities,    and    the   reported   amounts   of    sales    and    expenses
during    the    reported   period.    Actual   results   could   differ    from
those estimates.

2. Nonrecurring Expenses:

       The    Company    recorded    several   nonrecurring    pretax    charges
during   the   third  quarter  of  1997  totaling  $113.8   million.    Of   the
nonrecurring   charges,   $59.7  million  was   for   the   write-off   of   in-
process    research   and   development   acquired   in   the    purchases    of
Advanced   Logic   Research,   Inc.  (ALR)   and   certain   assets   of   Amiga
Technologies.    Also   included   in   the   nonrecurring   charges    was    a
non-cash     write-off     of    $45.2    million     resulting     from     the
abandonment    of    a   capitalized   internal-use   software    project    and
certain    computer    equipment.     In    addition,    $8.6    million     was
recorded   for   severance  of  employees  and  the   closing   of   a   foreign
office as part of the Company's ongoing global reorganization.


3. Acquisition:

      During   the   third   quarter  of  1997,  the   Company   completed   the
acquisition    of   substantially   all   of   the   outstanding    shares    of
common     stock    of    Advanced    Logic    Research,    Inc.    (ALR),     a
manufacturer    of   network   servers   and   personal   computers,    for    a
final    cash   purchase   price   of   $196.4   million.    Of   the   purchase
price,    $58.6    million   was   allocated   to   in-process   research    and
development   costs   and   expensed   during   the   quarter.    These    costs
were   expensed   as   the   technological   feasibility   of   the   in-process
research   and   development   had   not   yet   been   established   and    the
technology   had   no   alternative   use.   The   acquisition   was   accounted
for   as   a   purchase   business  combination.  Beginning   July   23,   1997,
the    results    of    ALR    have    been   included    in    the    Company's
consolidated    financial    statements.    ALR's    operating    results    for
periods   prior   to   the   acquisition  date  were   not   material   to   the
Company's consolidated results of operations.

4. Stock Split:

               On   May   15,   1997,  the  Board  of  Directors  authorized   a
two-for-one   stock   split   which   was   distributed   on   or   about   June
16,    1997,    to   shareholders   of   record   on   June   2,    1997.    All
references   in   the   financial   statements   to   number   of   shares   and
per    share    amounts   of   the   Company's   common    stock    have    been
retroactively   restated   to   reflect   the   increased   number   of   common
shares outstanding.

5. Share and Per Share Information:

       Net   income   (loss)   per   share   has   been   computed   using   net
income   (loss)   for   the   three  and  nine  months   ended   September   30,
1996   and   1997   and   the   weighted  average  number   of   common   shares
and,    as   appropriate,   common   share   equivalents   outstanding    during
the     period.      Common    share    equivalents    considered    outstanding
relate    to    stock   options   and   have   been   calculated    using    the
treasury stock method for all periods presented.












6. Accounting Policy for Derivatives:

            In   the   normal   course   of   business,   the   Company   enters
into   foreign   currency   forward  contracts   to   hedge   foreign   currency
transactions      and      probable      anticipated      foreign       currency
transactions.    These   forward   contracts   are   designated   as   a   hedge
of     international    sales    by    U.S.    dollar    functional     currency
entities      and     intercompany     purchases     by     certain      foreign
subsidiaries.     The    principal   currencies   hedged    are    the    German
Mark,   the   British   Pound,   the  French  Franc   and   the   Japanese   Yen
over   periods   ranging   from   one   to  six   months.    Forward   contracts
are   accounted   for   on   a   mark-to-market   basis,   with   realized   and
unrealized   gains   or   losses   recognized   currently.   Gains   or   losses
from    forward    contracts   which   are   effective   as    a    hedge    are
included   in   the   basis   of  the  designated  transaction.    The   related
receivable    or    liability    with    counterparties    to    the     forward
contracts    is   recorded   in   the   consolidated   balance   sheet.     Cash
flows    from    settlements   of   forward   contracts    are    included    in
operating    activities    in    the    consolidated    statements    of    cash
flows.

7. Financing Agreements:

         On    September   25,   1997,   the   bank   credit   agreement    (the
Agreement),   which   provides   for   unsecured   loans   of   up    to    $225
million,   was   amended.    The   amendment   removed   the   requirement    of
the Company to maintain minimum quick ratios.


        8. Selected Balance Sheet Information:
<TABLE>
<CAPTION>

                                                    December 31,         September 30,
                                                        1996                 1997
                                                             (in thousands)
                                                               (Unaudited)
  <S>                                           <C>                   <C> 
  Accounts receivable, net:                                          
      Accounts receivable                       $    468,691          $    511,890
      Less allowance for uncollectible               (18,968)              (19,230)
   accounts
                                                $    449,723          $    492,660
                                                                      
   Inventory:                                                         
      Components and subassemblies              $    269,959          $    346,330
      Finished goods                                   8,084                30,318
                                                $    278,043          $    376,648
</TABLE>
                                                                      
                                                                      



9. Contingencies:

         The    Company    is    a    party    to    various    lawsuits     and
administrative   proceedings   arising   in   the   ordinary   course   of   its
business.    The   Company   evaluates  such   lawsuits   and   proceedings   on
a   case-by-case   basis,   and  its  policy  is  to  vigorously   contest   any
such   claims   which   it   believes   are   without   merit.   The   Company's
management   believes   that   the   ultimate   resolution   of   such   pending
matters     will    not    materially    adversely    affect    the    Company's
business,    financial    position,    results    of    operations    or    cash
flows.

       The   Company   is   party  to  agreements  with   numerous   state   tax
authorities   pursuant   to   which   it   collects   and   remits    applicable
sales   or   use   taxes   in   such   states.    The   Company   entered   into
these    agreements   in   response   to   inquiries   of   taxing   authorities
in   those   states   concerning   whether  the   Company's   alleged   contacts
required   the   collection   of  sales  and  use  taxes   from   customers   in
those   states.    These   agreements   generally   limit   the   liability   of
the    Company   for   non-collection   of   sales   taxes   prior    to    such
agreements'    effective    dates.    These   agreements    do    not    address
income    taxes.     Taxing   authorities   in   other    states    have    made
similar    inquiries   concerning   the   Company's   alleged   contacts    with
those   states   and,   in   the  future,  could  make   specific   assessments.
The   Company   has  not  collected  or  remitted  any  sales   or   use   taxes
in   such   states   for   any   prior   periods,   nor   has   it   established
significant   reserves  for  the  payment  of  such   taxes.    There   can   be
no   assurance   that   the   amount   of   any   sales   or   use   taxes   the
Company    might   ultimately   be   required   to   pay   for   prior   periods
would   not   materially   and   adversely  affect   the   Company's   business,
consolidated    financial   position,   results   of    operations    or    cash
flows.

       The   Company   currently  pays  state  income  taxes   in   the   states
where   it   has   a   physical   presence.    The   Company   has   not    paid
income    taxes    in    any    other   state,   nor    has    it    established
significant   reserves   for   the   payment   of   such   taxes.     Management
believes   that   the   amount   of   any   income   tax   the   Company   might
ultimately    be    required   to   pay   for   prior    periods    would    not
materially     and     adversely     affect     the     Company's      business,
consolidated    financial   position,   results   of    operations    or    cash
flows.


10. Income Taxes:

       The   nonrecurring   expenses  relating   to   the   write-off   of   in-
process   research   and   development   arising   in   connection   with    the
acquisitions    of    ALR   and   certain   assets   of    Amiga    Technologies
during    the    third    quarter   were   nondeductible    for    income    tax
purposes.     As    a   result,   the   Company's   effective   tax    (benefit)
rate   was   (19.0%)   and   70.4%  for  the  three  and   nine   months   ended
September   30,   1997,   with   the  third  quarter   rate   representing   the
income tax benefit due to the net loss reported for the quarter.


11. Stock Option Plans:

       During   the   third  quarter  of  1997,  the  Company   introduced   the
Gateway   GoldShares   stock   option  program   and   awarded   stock   options
pursuant   to   the   Company's  1996  Long-Term  Incentive   Equity   Plan   to
eligible    employees   based   on   length   of   service   and   pay    level.
Under    the    GoldShares    program,   eligible   employees    were    granted
options    to    purchase    approximately   1,300,000    shares    of    common
stock    at   $32.63   per   share   in   September   1997.    Options   granted
under   the   plan   vest  at  the  rate  of  25%  per  year  from   the   grant
date   and   expire,   if   not  exercised,  ten  years   from   the   date   of
grant.


     Item 2.   Management's Discussion and Analysis of Financial Condition and
Results of Operations

         Results of Operations

      The  following table sets forth, for the periods indicated,  certain  data
derived   from  the  Company's         consolidated  statements  of  operations,
expressed as a percentage of net sales:

<TABLE>
<CAPTION>
                                               Three Months Ended              Nine Months Ended
                                                  September 30,                  September 30,
                                              1996           1997            1996            1997

                                                                                        
   <S>                                          <C>              <C>             <C>             <C>
   Net sales                                    100.0%           100.0%          100.0%          100.0%
   Cost of goods sold                            81.4%            87.0%           81.6%           83.3%
      Gross profit                               18.6%            13.0%           18.4%           16.7%
   Selling,  general  and  administrative                                                              
   expenses                                      11.3%            14.6%           11.8%           13.2%
   Nonrecurring items                                -             7.6%               -            2.6%
      Operating income (loss)                     7.3%           (9.2)%            6.6%            0.9%
   Other income, net                              0.5%             0.4%            0.5%            0.4%
      Income (loss) before income taxes           7.8%           (8.8)%            7.1%            1.3%
   Provision (benefit) for income taxes           2.8%           (1.7)%            2.4%            0.9%
      Net income (loss)                           5.0%           (7.1)%            4.7%            0.4%
                                                                                                       


       Sales    Sales   increased  25%  in  the  third  quarter   of   1997   to
$1.50   billion  from  $1.20  billion  in  the  third  quarter   of   1996   and
increased   8%   over  sales  in  the  second  quarter   of   1997.    For   the
nine    months   ended   September   30,   sales   increased   24%   to    $4.32
billion   from   $3.48  billion  in  the  comparable  period   of   1996.    The
increase   in   sales   for  the  third  quarter  of   1997   over   the   third
quarter   of   1996  resulted  from  continued  demand  growth   in   the   Asia
Pacific   and   the   Americas   regions  and  the   acquisition   of   Advanced
Logic   Research,   Inc.   (ALR).    Sales  during   the   first   nine   months
of   1997   increased  over  the  comparable  period  of   1996   due   to   the
continued   growth   in   all   of  the  Company's   markets   and   accelerated
growth in sales of the Company's portable products.

        Sales   in   the   Americas  region  for  the   quarter   increased   to
$1.30   billion,   an   increase  of  27%  over  the  $1.02   billion   recorded
in   the   third   quarter   of  1996  and  an  increase   of   14%   over   the
second    quarter    of    1997.    For   the   nine    month    period    ended
September   30,   1997,   sales   in  the  Americas   region   grew   23%   over
1996   levels   to   $3.60   billion.   International   sales   in   the   third
quarter    of    1997   increased   17%   to   $208.1   million   from    $178.4
million   in   the   third   quarter   of   1996,   but   decreased   from   the
second   quarter   of   1997   by  17%.   For   the   first   nine   months   of
1997,    international   sales   increased   31%   to   $714.5   million    from
$544.7   million   in   the  first  nine  months  of   1996.    Sales   in   the
quarter    from   the   Company's   European   region   were   $127.2   million,
an   increase   of   approximately  10%  from  the  third  quarter   last   year
but   a   decrease   of   approximately  22%  from   the   second   quarter   of
this   year,   which   is   generally   a   seasonally   stronger   quarter   in
the   region.    Sales   for   the   first  nine   months   of   1997   in   the
Company's    European   region   were   $467.6   million,   an    increase    of
approximately   23%   over   the  comparable   period   of   1996.    Sales   in
the   Company's   Asia  Pacific  region  were  $80.9  million   in   the   third
quarter   of   1997,   an   increase  of  29%  over   the   third   quarter   of
1996,   but   a  decrease  of  7%  from  the  second  quarter  of  1997,   which
is   generally   a   seasonally  stronger  quarter   in   the   region.    Sales
for   the   first   nine   months  of  1997  in  the  Company's   Asia   Pacific
region   totaled   $246.8  million,  an  increase  of   51%   over   the   first
nine months of 1996.

       Unit   shipments  in  the  third  quarter  of  1997  increased   31%   to
approximately   622,000   from   474,000  in   the   third   quarter   of   1996
and   increased   12%   from   unit  shipments  in   the   second   quarter   of
1997.     For    the    nine   months   ended   September   30,    1997,    unit
shipments     increased     34%     to     approximately     1,736,000      from
approximately   1,298,000   in   the  first   nine   months   of   1996.    Unit
shipments   in   the   Company's   Americas   region   grew   31%    over    the
third   quarter   of   1996   and  increased  17%  over   the   second   quarter
of   1997.    For   the   nine   months   ended   September   30,   1997,   unit
shipments   in   the   Americas   region   increased   31%   over   the    first
nine   months   of   1996.    Unit   shipments   in   the   Company's   European
region   grew   5%   over  the  third  quarter  of  1996,  but   decreased   21%
from   the   second   quarter  of  1997,  which  is   generally   a   seasonally
stronger    quarter    in   the   region.    For   the   nine    months    ended
September    30,    1997,    unit   shipments    in    the    European    region
increased   30%   over   the  first  nine  months  of   1996.   Unit   shipments
for    the   third   quarter   of   1997   in   the   Company's   Asia   Pacific
region   grew   41%   over  the  third  quarter  of  1996  but   decreased   13%
over   the   second   quarter  of  1997,  which  is   generally   a   seasonally
stronger    quarter    in   the   region.    For   the   nine    months    ended
September   30,   1997,   unit   shipments   in   the   Asia   Pacific    region
increased 87% over the comparable period of 1996.

       Weighted   average   unit  prices  (AUP)  in   the   third   quarter   of
1997   were  4.3%  lower  than  prices  in  the  third  quarter  of   1996   and
3.8%    lower   than   prices   in   the   second   quarter   of   1997.     The
primary    cause   for   the   decrease   in   the   AUP   during   the    third
quarter   was   an  increase  in  the  mix  of  sub-$2,000  priced   PC's   sold
in   the   quarter.   For  the  first  nine  months  of  1996,  AUP   was   7.3%
below   levels   for   the  first  nine  months  of  1996.    In   addition   to
the    mix   shift   previously   mentioned,   the   comparatively   lower   AUP
is   primarily   due   to   unusually  high  selling   prices   experienced   in
the   first   six  months  of  1996.  The  Company  has  generally   sought   to
offset   such   decreasing   unit  prices  by  adding   or   improving   product
features    and    by    introducing    new    products    based    on     newer
technology    at    higher    unit   prices.   In    1995,    significant    new
technology   was   introduced,   outpacing  the   normal   rate   of   component
cost    declines,    and    as    a   result,   prices    gradually    increased
throughout    the    year.      Average   unit   selling    prices    maintained
these   abnormally   high   levels  through   the   first   quarter   of   1996.
Beginning   in   the   second   quarter   of   1996,   in   addition   to    the
normal    component    cost   declines,   significant   cost    declines    were
experienced   in   Dynamic   Random  Access   Memory   (DRAM)   prices.    These
declines   in   component   costs  were  generally  passed   on   to   customers
through   price   decreases.   In  addition,  the   rate   of   new   technology
introduced   in   1996   slowed,   and   was   not   substantial    enough    to
offset   the   declines   in  component  prices,  also   contributing   to   the
decline in average unit prices.

       Gross   Profit    Gross   profit   in   the   third   quarter   of   1997
decreased   12.6%   from   the   third  quarter   of   1996.    In   the   first
nine    months    of   1997,   gross   profit   increased   12.4%    over    the
comparable    periods   of   1996.    As   a   percentage   of   sales,    gross
profit   for   the   third  quarter  and  the  first   nine   months   of   1997
decreased    to   13.0%   and   16.7%   from   18.6%   and   18.4%    for    the
comparable   periods   of   1996,   and   decreased   in   comparison   to   the
18.7%   levels   in   the   second   quarter   of   1997.    Operating   results
for   the   third   quarter   of   1997   were   adversely   impacted   by   the
effects   of   excess   inventories.    During   the   third   quarter,    there
were   significant   declines   in   the  market   value   of   many   inventory
components.    In   order   to   promptly   mitigate   the   impact   of   these
excess   inventories,   the   Company   sold   product   with   profit   margins
below    targeted    levels.     In    addition,    reserves    were    recorded
against   excess   and  obsolete  inventories  still  on   hand   at   the   end
of the third quarter.

         Selling,     General    and    Administrative    Expenses      Selling,
general    and    administrative   expenses   for   the   third   quarter    and
first    nine    months    of   1997   increased   approximately    61.7%    and
38.2%,   respectively,   over   the  comparable   periods   of   1996.    As   a
percentage   of   sales,   in  the  third  quarter   and   first   nine   months
of    1997,    these   expenses   increased   to   approximately    14.6%    and
13.2%,    respectively,    from   11.3%   and   11.8%    in    the    comparable
periods   of   1996.    These   increases   are   primarily   the   result    of
increases   in   marketing   communications   and   personnel   expenses,    the
inclusion    of   the   operating   expenses   of   Advanced   Logic   Research,
Inc.   (ALR)   which   was   acquired  during  the  third   quarter   of   1997,
the   impact   of   the   United  Parcel  Service  (UPS)   strike   on   freight
costs, and other increases in credit card and telephone expenses.

        Nonrecurring   Expenses    As   previously   indicated,   the    Company
recorded     several    nonrecurring    pretax    charges    totaling     $113.8
million    for    the   third   quarter   of   1997.    Of   the    nonrecurring
charges,    $59.7    million    was   for   the    write-off    of    in-process
research   and   development   acquired   in   the   purchase   of    ALR    and
certain    assets    of   Amiga   Technologies.    Also    included    in    the
nonrecurring    charges   was   a   non-cash   write-off   of   $45.2    million
resulting    from    the    abandonment   of    a    capitalized    internal-use
software    project    and   certain   computer   equipment.     In    addition,
$8.6    million   was   recorded   for   severance   of   employees   and    the
closing   of   a   foreign   office   as   part   of   the   Company's   ongoing
global reorganization.

       Operating   Income   (Loss)    Due  to  the  factors   discussed   above,
the     operating    loss    in    the    third    quarter    of    1997     was
$137.9    million   as   compared   to   the   $87.8   million   of    operating
income   in   the   third   quarter  of  1996.    Operating   income   for   the
nine    months   ended   September   30,   1997   decreased   83.9%   to   $36.9
million from $229.1 million in the first nine months of 1996.

       Other   Income,   Net    Other   income,  net   includes   other   income
net    of    expenses,   such   as   interest   income   and   expense,    lease
financing    commissions,    referral   fees   for    on-line    services    and
foreign   exchange   transaction   gains  and   losses.    Other   income,   net
decreased   to   $5.6   million  from  $6.1  million  in   the   third   quarter
of    1996,    due    to    decreases    in   interest    income.    With    the
acquisition    of    ALR    being   funded   through    the    Company's    cash
reserves,     the     third     quarter    experienced     a     decrease     in
availability    of    additional   cash   and   marketable    securities    from
the    previous    year's    quarter    causing    decreases    in    additional
interest   income.    This   decrease   was   partially   offset   by    foreign
exchange   transaction   gains   recognized  during   the   third   quarter   of
1997.     For    the   nine   months   ended   September   30,    1997,    other
income,   net   increased   to   $20.2  million  from   $19.1   million   during
the    first   nine   months   of   1996.    The   principal   cause   for   the
increase    was    additional   interest   income   as   a   result    of    the
availability    of    additional   cash   and    marketable    securities,    on
average,   during   the  first  nine  months  of  1997  as   compared   to   the
same   period   of   time   in  1996.   This  increase  was   partially   offset
by   foreign   exchange   transaction   losses   and   decreases   in   referral
commissions from internet providers over the nine month period.

        Income    Taxes    The   nonrecurring   expenses   relating    to    the
write-off    of    in-process    research    and    development    arising    in
connection   with   the   acquisitions   of   ALR   and   certain   assets    of
Amiga    Technologies    during   the   third   quarter    were    nondeductible
for   income   tax   purposes.    As   a   result,   the   Company's   effective
tax   (benefit)   rate   was  (19.0%)  and  70.4%  for  the   three   and   nine
months    ended   September   30,   1997,   with   the   third   quarter    rate
representing   the   income  tax  benefit  due  to   the   net   loss   reported
for    the   quarter.    The   Company's   effective   rate   was   35.3%    and
34.5% for the three and nine months ended September 30, 1996.


Liquidity and Capital Resources

         The    Company    has    financed    its    operating    and    capital
expenditure    requirements   to   date   principally    through    cash    flow
from   its   operations.   At  September  30,  1997,  the   Company   had   cash
and   cash   equivalents   of   $274.0   million,   marketable   securities   of
$21.4    million    and   an   unsecured   committed   credit   facility    with
certain   banks   of   $225  million,  consisting  of  a   revolving   line   of
credit    facility   and   a   sub-facility   for   letters   of   credit.    At
September    30,    1997,    no    amounts   were    outstanding    under    the
revolving     line    of    credit.     Approximately    $4.2    million     was
committed    to    support    outstanding    standby    letters    of    credit.
Management    believes    the    Company's   current    sources    of    working
capital,     including     amounts    available    under     existing     credit
facilities,    will   provide   adequate   flexibility   for    the    Company's
financial needs for at least the next 12 months.

       The   Company   generated   $30.6  million  in   cash   from   operations
during   the   first   nine   months  of  the   year.    Net   income   adjusted
for    non-cash    items    totaled    $132.7    million,    including    $113.8
million    in    nonrecurring   items   and   increases    in    deferred    tax
assets    of    $63.7    million.     An   increase    in    inventory    levels
consumed    approximately   $83.5   million   in   cash,   but   was   partially
offset   by   an   increase   in  accounts  payable   of   $41.9   million   and
other   liabilities   of   $36.9  million.   The  timing   of   federal   income
tax   payments   in   the   first  nine  months  consumed   $29.3   million   in
cash.    The   Company   used  approximately  $271.8  million   in   cash   from
investing   activities   as   a   result  of   the   $142.3   million   purchase
of   ALR,   net   of   cash   acquired,  the  Company's   continued   investment
in   facilities,   and   a   $21.3   million  net   investment   in   marketable
securities .

         At     September    30,    1997,    the    Company    had     long-term
indebtedness   and   capital   lease   obligations   of   approximately    $18.7
million.     These    obligations   relate   primarily    to    the    Company's
expansion    of    international   operations    and    its    investments    in
equipment   and   facilities.    Borrowings,   exclusive   of   capital    lease
obligations,   bear   fixed   and   variable   rates   of   interest   currently
ranging   from   interest   free  (for  certain   incentive   funds   from   the
Industrial     Development    Authority    of    the    City     of     Hampton,
Virginia)   to   8.87%   and   have  varying  maturities   through   2001.   The
Company's    capital    lease   obligations   relate    principally    to    its
computer and telephone system equipment.

       On   July   23,   1997,   the  Company  completed  the   acquisition   of
Advanced   Logic   Research,   Inc.   (ALR).    The   acquisition   was   funded
through   the   Company's   cash   reserves   for   $142.3   million,   net   of
cash    acquired.     Of    the    purchase    price,    $58.6    million    was
allocated    to    in-process   research   and   development   projects.     The
Company   expects   ALR   to   continue   to   develop   these   projects   into
commercially    viable   products   in   the   normal   course    of    business
over the next 1 to 5 years.

       The   Company   anticipates  that  it  will  retain   all   earnings   in
the   foreseeable   future   for  development   of   its   business   and   will
not distribute earnings to its stockholders as dividends.

Factors That May Affect Future Results

       This   Report   includes   forward-looking  statements   made   in   good
faith    based   on   current   management   expectations   pursuant   to    the
safe    harbor    provisions    of    the    Private    Securities    Litigation
Reform   Act   of   1995.  These  statements  are  not  guarantees   of   future
performance   and   actual   outcomes   may   differ   materially   from    what
is expressed or forecasted.

       Factors   that   could  cause  future  results  to  differ   from   these
expectations    include    the    following:    growth    in    the     personal
computer     industry;    competitive    factors    and    pricing    pressures;
component    supply   shortages;   inventory   risks   due    to    shifts    in
market    demand;    the    outcome   of   pending   and   future    litigation;
changes    in    government    regulation;   foreign   currency    fluctuations;
risks     of     acquired     businesses;    and    general     domestic     and
international economic conditions.

       In   addition   to   other   information  contained   in   this   Report,
the   following   factors,   among   others,  sometimes   have   affected,   and
in    the   future   could   affect,   the   Company's   actual   results,   and
could    cause    future    results   to   differ    materially    from    those
expressed   in   any   forward  looking  statement  made  by,   or   on   behalf
of the Company.

        Management    of    rapid    growth   of    the    Company,    including
problems    with    respect   to   the   size   of   its    work    force    and
production     facilities    and    the    adequacy    of     its     management
information   and   other   systems,   purchasing   and   inventory    controls,
and   the   forecasting   of   component  part   needs   and   pricing   changes
have   the   potential   to   affect  results.   These   problems   can   result
in    high   backlog   of   product   orders,   delays   in   customer   support
response times and increased expense levels.

        Short    product   life   cycles   characterize   the    PC    industry,
resulting     from     rapid    changes    in    technology     and     consumer
preferences   and   declining   product   prices.    The   Company's    in-house
engineering    personnel    work   closely   with   PC    component    suppliers
and     other     technology    developers    to     evaluate     the     latest
developments   in   PC-related  technology.    There   can   be   no   assurance
that   the   Company   will   continue  to  have  access   to   new   technology
or   will   be   successful  in  incorporating  such  new  technology   in   its
products or features in a timely manner.

        Certain    key   management   employees,   particularly    Ted    Waitt,
Chairman    and    Chief   Executive   Officer   and   a    founder    of    the
Company,   have   been   instrumental   in   the   success   of   the   Company.
The   Company   has   not  entered  into  an  employment  agreement   with   Ted
Waitt.    The   loss   of   Ted   Waitt's   services   could   materially    and
adversely affect the Company.

       The   Company   is   party  to  agreements  with   numerous   state   tax
authorities   pursuant   to   which   it   collects   and   remits    applicable
sales   or   use   taxes   in   such   states.    The   Company   entered   into
these    agreements   in   response   to   inquiries   of   taxing   authorities
in    those    states   concerning   alleged   Company   contacts   with    such
states   and   whether   such   alleged   contacts   required   the   collection
of    sales   and   use   taxes   from   customers   and/or   the   payment   of
income   tax   in   those   states.   These  agreements  generally   limit   the
liability   of   the   Company  for  non-collection   of   sales   taxes   prior
to    such   agreements'   effective   dates.    These   agreements    do    not
address    income   taxes.    Taxing   authorities   in   other   states    have
made   similar   inquiries   or   asserted   similar   claims   concerning   the
Company's   alleged   contacts   with   those   states   and   in   the   future
could    make   specific   assessments.    The   Company   has   not   collected
or   remitted   any  sales  or  use  taxes  in  such  states   for   any   prior
period,    nor    has    it   established   significant   reserves    for    the
payment   of   such  taxes.   There  can  be  no  assurance  that   the   amount
of    any    sales   or   use   taxes   the   Company   might   ultimately    be
required    to    pay   for   prior   periods   would   not    materially    and
adversely    affect    the    Company's   business,    consolidated    financial
position, results of operations or cash flows.

       The   Company   currently   pays  state   income   taxes   in   the   few
states   where   it   has   a   physical  presence.    The   Company   has   not
paid    income    taxes    in   other   states,   nor   has    it    established
significant   reserves   for   the   payment   of   such   taxes.     Management
believes   that   the   amount   of   any   income   tax   the   Company   might
ultimately    be    required   to   pay   for   prior    periods    would    not
materially     and     adversely     affect     the     Company's      business,
consolidated    financial   position,   results   of    operations    or    cash
flows.



                     II.  OTHER INFORMATION


     1Item 6.  Exhibits and Reports on Form 8-K

        (a)    Exhibits:



    Exhibit                    Description of Exhibits
      No.
              
     10.13    1997 Amended and Restated Credit Agreement dated as of
              September 25, 1997 among the Company, the banks party
              thereto, Norwest Bank Iowa, N.A., as Administrative Agent
              and Bank of America National Trust and Savings
              Association as Documentation Agent, filed herewith.
              
     10.14    Consultation and Noncompetition Agreement dated as of
              August 28, 1997 between the Company and Richard D.
              Snyder, filed herewith.
              
      27.1    Financial Data Schedule, filed herewith.


  (b)     Reports on Form 8-K:

      No Reports on Form 8-K were filed by the Company during the
quarter ended September 30, 1997


                            SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act
of  1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                 Gateway 2000, Inc.


Date:  November 13, 1997
                                 By: /s/David J. McKittrick
                                    David J. McKittrick
                                   Senior Vice President, Chief
                                    Financial Officer and
                                   Treasurer (authorized officer
                                    and chief accounting officer)



  Exhibit                             INDEX TO EXHIBITS
    No.     

  10.13            1997 Amended and Restated Credit Agreement dated as of 
                   September 25, 1997 among the Company, the banks party thereto
                   Norwest Bank Iowa, N.A., as Administrative Agent and Bank
                   of America National Trust and Savings Association as 
                   Documentation Agent, filed herewith.

 10.14             Consultation and Noncompetition Agreement dated as of August
                   28, 1997 between the Company and Richard D. Snyder, filed 
                   herewith.

 27.1              Financial Data Schedule, filed herewith.

                      


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