<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A

|X|     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       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, 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.)

                             4545 TOWNE CENTRE COURT
                           SAN DIEGO, CALIFORNIA 92121
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (858)799-3401


         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 X  No   .
                                             ---   ---

         As of November 9, 2000, there were 323,346,222 shares of the Common
Stock of the Company, $.01 par value per share, outstanding. As of November 9,
2000, there were no shares of the Company's Class A Common Stock, $.01 par value
per share, outstanding.


<PAGE>


The undersigned registrant hereby amends its quarterly report on Form 10-Q for
the quarter ended September 30, 2000 as set forth in the pages attached hereto
(see Note 3 of the Notes to Consolidated Financial Statements and other
changes herein.)

                            I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                                 GATEWAY, INC.
                       CONSOLIDATED INCOME STATEMENTS
                        FOR THE THREE AND NINE MONTHS
                       ENDED SEPTEMBER 30, 1999 AND 2000
                    (in thousands, except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                THREE MONTHS ENDED SEPTEMBER 30,    NINE MONTHS ENDED SEPTEMBER 30,
                                                --------------------------------    -------------------------------
                                                     1999              2000               1999             2000
                                                --------------   ---------------    --------------   ---------------
                                                                  (restated)                            (restated)
<S>                                             <C>              <C>                <C>             <C>
Net sales                                       $    2,263,901   $ 2,548,290        $ 6,415,178      $    7,154,257
Cost of goods sold                                   1,790,931     1,969,593          5,116,428           5,557,687
                                                --------------   ---------------    --------------   ---------------
     Gross profit                                      472,970       578,697          1,298,750           1,596,570
Selling, general and administrative expenses           314,191       392,005            876,240           1,060,025
                                                --------------   ---------------    --------------   ---------------
     Operating income                                  158,779       186,692            422,510             536,545
Other income, net                                       18,020        17,703             49,295              54,935
                                                --------------   ---------------    --------------   ---------------
     Income before income taxes and cumulative
     effect of change in accounting principle          176,799       204,395            471,805             591,480
Provision for income taxes                              63,648        72,557            169,850             209,973
                                                --------------   ---------------    --------------   ---------------
     Net income before cumulative effect of
     change in accounting principle             $      113,151   $   131,838        $   301,955      $      381,507

Cumulative effect of change in accounting
       principle, net                                       --            --               --               (11,851)
                                                --------------   ---------------    --------------   ---------------
     Net income                                 $      113,151   $   131,838        $   301,955      $      369,656
                                                ==============   ===============    ==============   ===============

     Net income per share before cumulative
       effect of change in accounting principle:
        Basic                                   $         0.36   $      0.41        $      0.96      $         1.19
                                                ==============   ===============    ==============   ===============
        Diluted                                 $         0.35   $      0.40        $      0.94      $         1.15
                                                ==============   ===============    ==============   ===============
     Net income per share after cumulative
       effect of change in accounting principle:
        Basic                                   $         0.36   $      0.41        $      0.96      $         1.15
                                                ==============   ===============    ==============   ===============
        Diluted                                 $         0.35   $      0.40        $      0.94      $         1.11
                                                ==============   ===============    ==============   ===============
     Weighted average shares outstanding:
        Basic                                          313,719       322,408            313,203             321,221
                                                ==============   ===============    ==============   ===============
        Diluted                                        323,912       333,681            321,755             332,348
                                                ==============   ===============    ==============   ===============

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       2
<PAGE>


                                 GATEWAY, INC.
                           CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 1999 AND SEPTEMBER 30, 2000
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                                 DECEMBER 31,  SEPTEMBER 30,
                                                                                     1999           2000
                                                                                 -----------    -----------
                                                                                               (unaudited and
                                                                                                  restated)
<S>                                                                               <C>           <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                    $1,127,654    $   849,998
     Marketable securities                                                           208,717        132,874
     Accounts receivable, net                                                        646,339        533,149
     Inventory, net                                                                  191,870        328,765
     Other                                                                           522,225        709,053
                                                                                 -----------    -----------
             Total current assets                                                  2,696,805      2,553,839
Property, plant and equipment, net                                                   745,660        840,271
Intangibles, net                                                                      52,302        190,706
Other assets                                                                         459,921        858,489
                                                                                 -----------    -----------
                                                                                 $ 3,954,688    $ 4,443,305
                                                                                 ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                            $   898,436    $   908,707
     Accrued liabilities                                                             609,132        522,861
     Accrued royalties                                                               153,840        133,040
     Other current liabilities                                                       148,302        190,002
                                                                                 -----------    -----------
             Total current liabilities                                             1,809,710      1,754,610
Long-term obligations, net of current maturities                                       2,998          2,796
Warranty and other noncurrent liabilities                                            124,862        175,198
                                                                                 -----------    -----------
             Total liabilities                                                     1,937,570      1,932,604
                                                                                 -----------    -----------

Contingencies (Note 7)

Stockholders' equity:
     Preferred Stock, $.01 par value, 5,000 shares authorized; none
       issued                                                                             --             --

     Class A Common Stock, nonvoting, $.01 par value, 1,000 shares
       authorized; none issued                                                            --             --
     Common Stock, $.01 par value, 1,000,000 shares authorized; 320,016 shares
     and 323,153 shares issued in 1999 and 2000, respectively                          3,200          3,232
     Additional paid-in capital                                                      656,870        735,251
     Treasury stock, at cost, 730 shares in 1999                                     (51,796)            --
     Retained earnings                                                             1,408,852      1,778,506
     Accumulated other comprehensive loss                                                 (8)        (6,288)
                                                                                 -----------    -----------
             Total stockholders' equity                                            2,017,118      2,510,701
                                                                                 -----------    -----------

                                                                                 $ 3,954,688    $ 4,443,305
                                                                                 ===========    ===========

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       3
<PAGE>


                                  GATEWAY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                          NINE MONTHS ENDED SEPTEMBER 30,
                                                                        -----------------------------------
                                                                              1999                2000
                                                                        -----------------   ---------------
                                                                                               (restated)
<S>                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                         $      301,955      $      369,656
     Adjustments to reconcile net income to net
       cash provided by operating activities:
         Depreciation and amortization                                          99,458             141,109
         Provision for uncollectible accounts receivable                        17,617              15,087
         Deferred income taxes                                                 (13,252)             (6,517)
         Other, net                                                                367              (4,400)
         Changes in operating assets and liabilities:
            Accounts receivable                                               (167,342)             98,103
            Inventory                                                           (4,119)           (136,895)
            Other assets                                                       (77,353)            (78,537)
            Accounts payable                                                   145,090               9,563
            Accrued liabilities                                                105,636             (88,663)
            Accrued royalties                                                   (9,210)            (20,800)
            Other current liabilities                                           38,554             101,597
            Other liabilities                                                      464              27,701
                                                                        -----------------   ---------------
                  Net cash provided by operating activities                    437,865             427,004
                                                                        -----------------   ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                     (240,914)           (236,591)
     Investment in unconsolidated entities                                    (128,298)           (246,900)
     Purchases of available-for-sale securities                               (126,890)            (80,968)
     Proceeds from maturity of available-for-sale securities                    85,304                   -
     Proceeds from sales of available-for-sale securities                            -             157,154
     Purchase of financing receivables, net of repayments                     (146,991)           (276,528)
     Purchase of note receivable                                                     -             (62,500)
     Other, net                                                                 (1,841)              1,539
                                                                        -----------------   ---------------
         Net cash used in investing activities                                (559,630)           (744,794)
                                                                        -----------------   ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Purchase of treasury stock                                                (70,784)            (37,045)
     Principal payments on long-term obligations and notes payable              (7,721)             (8,685)
     Stock options exercised                                                    43,879              78,632
     Proceeds from issuance of long-term obligations                                 -               3,000
     Proceeds from issuance of stock                                                 -               1,775
                                                                        -----------------   ---------------
         Net cash (used in) provided by financing activities                   (34,626)             37,677
Foreign exchange effect on cash and cash equivalents                             1,054               2,457
                                                                        -----------------   ---------------
Net decrease in cash and cash equivalents                                     (155,337)           (277,656)
Cash and cash equivalents, beginning of period                               1,169,810           1,127,654
                                                                        -----------------   ---------------
Cash and cash equivalents, end of period                                $    1,014,473      $      849,998
                                                                        =================   ===============

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       4
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       GENERAL:

         The accompanying unaudited consolidated financial statements of
Gateway, Inc. (the "Company") as of September 30, 2000 and for the three and
nine months ended September 30, 1999 and 2000 have been prepared on the same
basis as the audited consolidated financial statements for the year ended
December 31, 1999 and, in the opinion of management, reflect all adjustments
necessary to fairly state the consolidated financial position, results of
operations and cash flows for the interim periods. All adjustments are of a
normal, recurring nature, except as described in Note 3. The results for the
interim periods 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, 1999, which are included in
the Company's 1999 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission. The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.


2.       REVENUE RECOGNITION:

         Effective January 1, 2000, the Company changed its revenue
recognition policy consistent with the guidance contained in Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements", issued by
the Securities and Exchange Commission in December 1999. The Company's
previous policy stated that revenue is recognized upon shipment of goods to
customers. The new policy recognizes that the risks and rewards of ownership
in many transactions do not substantively transfer to customers until the
product has been delivered and other conditions have been satisfied, even
though legal title has transferred upon shipment. The cumulative effect of
this accounting change was $12 million, net of tax. The pro forma effect of
this accounting change on prior periods is not material.

3.       RESTATEMENT:

The third quarter results have been restated as follows:

<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                   SEPTEMBER 30, 2000                     SEPTEMBER 30, 2000
                                                   AS               AS                   AS                 AS
                                                REPORTED         RESTATED             REPORTED           RESTATED
                                                --------         --------             --------           --------
<S>                                          <C>              <C>                  <C>                 <C>
Net sales                                    $     2,530,093  $    2,548,290       $      7,009,852    $    7,154,257
Gross profit                                         583,604         578,697              1,610,070         1,596,570
Operating income                                     219,127         186,692                580,969           536,545
Net income before cumulative effect of
  change in accounting principle                     152,613         131,838                410,824           381,507
Cumulative effect of change in accounting
   principle                                              --              --                     --           (11,851)
Net income                                           152,613         131,838                410,824           369,656

</TABLE>


                                       5
<PAGE>


The following is a summary of the restatement adjustments (in thousands):

<TABLE>
<CAPTION>

                                                                     THIRD            YEAR TO
                                                                    QUARTER             DATE
                                                                 -------------     -------------
<S>                                                              <C>               <C>
ADJUSTMENTS IMPACTING NET INCOME

Net Sales
   Accounting pronouncements (1)                                   $   (2,179)      $   (31,548)
   Foreign subsidiary adjustments (3)                                  (2,368)          (13,078)
   Other adjustments (4)                                              (74,049)          (80,898)
                                                                  ------------------------------
   TOTAL REVISIONS TO NET SALES                                   $   (78,596)       $ (125,524)
                                                                  ------------------------------

Gross profit
   Accounting pronouncements (1)                                        1,159            (8,324)
   Foreign subsidiary adjustments (3)                                    (118)             (654)
   Loan loss reserves (5)                                             (13,987)          (13,987)
   Other adjustments (5)                                              (18,988)          (20,291)
                                                                  ------------------------------
   TOTAL REVISIONS TO GROSS PROFIT                                $   (31,934)      $   (43,256)
                                                                  ------------------------------

Operating income
   Accounting pronouncements (1)                                        1,159            (8,324)
   Foreign subsidiary adjustments (3)                                    (118)             (654)
   Loan loss reserves (5)                                             (13,987)          (13,987)
   Other adjustments (4)                                              (19,489)          (21,459)
                                                                  ------------------------------
   TOTAL REVISIONS TO OPERATING INCOME                            $   (32,435)      $   (44,424)
                                                                  ------------------------------

Net income
   Accounting pronouncements (1)                                          748            (5,369)
   Foreign subsidiary adjustments (3)                                     (77)             (424)
   Loan loss reserves (5)                                              (9,022)           (9,022)
   Other adjustments (4)                                              (12,424)          (13,962)
                                                                  ------------------------------
   TOTAL REVISIONS TO NET INCOME BEFORE CUMULATIVE
    EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                      $   (20,775)      $   (28,777)
                                                                  ------------------------------

Cumulative effect of change in accounting principle                        --           (11,851)

Total revisions to net income                                     $   (20,775)      $   (40,628)

TOTAL REVISIONS TO NET INCOME (LOSS) PER DILUTED SHARE            $     (0.06)      $     (0.11)

ADJUSTMENTS NOT IMPACTING NET INCOME (2)

TOTAL REVISIONS TO NET SALES                                            96,793           269,929

TOTAL REVISIONS TO GROSS PROFIT                                         27,027            29,754

TOTAL REVISIONS TO OPERATING INCOME                                         --                --

</TABLE>


                                       6
<PAGE>


1.   Effective January 1, 2000, the Company changed its revenue recognition
     policy consistent with the guidance contained in Staff Accounting Bulletin
     No. 101. The new policy recognizes that the risks and rewards of ownership
     in many transactions do not substantively transfer to customers until the
     product has been delivered to the customer, even though legal title has
     transferred upon shipment. The Company's previous policy was to recognize
     revenue upon product shipment from the Company's manufacturing facilities.
     The new policy defers revenue recognition of certain quarter and year-end
     shipments to future periods.

2.   During the fourth quarter of 2000, the Company reclassified freight billed
     to customers from selling, general and administrative expenses to net
     sales, and has reclassified related freight costs from selling, general and
     administrative expenses to cost of sales pursuant to FASB Emerging Issues
     Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees and
     Costs." Additionally, technical support expenses have been reclassified
     from selling, general and administrative expenses to cost of goods sold.
     The first, second and third quarter financial information for 2000 and
     all information for 1999 have been restated for these reclassifications.
     These reclassifications were not material to previously reported gross
     profit and had no impact on quarterly operating income (loss) or net income
     (loss) as previously reported in 2000 or 1999.

3.   The Company has corrected accounting irregularities relating to a foreign
     subsidiary's revenue caused by some former personnel of the subsidiary.

4.   Other adjustments primarily consist of revenue recognition items,
     including $27.0 million in revenue and $6.0 million in net income that
     is expected to be recognized in future periods. In addition, $46.0 million
     in revenue relates to the sale of computers and other equipment that
     represented a sale of fixed assets.

5.   The Company changed its methodology in determining its allowance for
     losses on customer finance receivables retroactive.


4.       FINANCE RECEIVABLES:

         Finance receivables, included in other current assets and other assets,
consist of receivables due from customer installment purchases of the Company's
products and services net of allowance for losses. Finance charges on the
receivables are recognized using the interest method. Finance charge accruals
are generally suspended on accounts when they become 60 days contractually
delinquent. Receivable origination and commitment fees are deferred and
amortized as a component of finance charges over the life of the related
receivable.

         The Company maintains an allowance for losses on finance receivables
at an amount that it believes is sufficient to provide for losses in its
existing receivables portfolio. The allowance is evaluated on a regular basis
by management and is based upon management's periodic review of the
collectibility of the receivables with respect to historical experience, the
nature and volume of the portfolio, adverse situations that may affect the
customer's ability to repay and general economic conditions. Finance
receivables are charged to the allowance for losses when they are deemed to
be uncollectible, generally when the receivable becomes 180 days delinquent.
Although the allowance for losses on finance receivables which was increased
as a part of this restatement, reflected in the Company's consolidated
balance sheet at September 30, 2000 is considered adequate by the Company's
management, there can be no assurance that this allowance will prove to be
adequate over time to cover ultimate losses in connection with the Company's
finance receivables.

                                       7
<PAGE>


5.       COMPREHENSIVE INCOME:

         Comprehensive income for the Company includes net income, foreign
currency translation effects, and unrealized gains or losses on
available-for-sale securities which are charged or credited to the accumulated
other comprehensive income (loss) account within stockholders' equity.

         Comprehensive income (loss) for the three and nine month periods ended
September 30, 1999 and 2000 was as follows (unaudited and in thousands):

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                NINE MONTHS ENDED
                                                            SEPTEMBER 30,                   SEPTEMBER 30,
                                                   --------------------------------- -------------------------------
                                                        1999             2000            1999             2000
                                                   ---------------- ---------------- --------------  ---------------
                                                                      (restated)                       (restated)
<S>                                                <C>              <C>              <C>             <C>
Comprehensive  Income:

Net income                                         $     113,151    $     131,838    $   301,955     $    369,656
Foreign currency translation                               5,438            2,252          2,881            1,747
Unrealized gain (loss) on available-for-sale
securities                                                 1,357           (1,962)         1,357           (8,027)
                                                   ---------------- ---------------- --------------  ---------------

Total comprehensive income                         $     119,946    $     132,128    $   306,193     $    363,376
                                                   ================ ================ ==============  ===============

</TABLE>

6.     SHARE AND PER SHARE INFORMATION:

         Basic earnings per common share is computed using the weighted average
number of common shares outstanding during the period. Diluted earnings per
common share is computed using the combination of diluted common stock
equivalents and the weighted average number of common shares outstanding during
the period.

         The following table sets forth a reconciliation of shares used in the
computation of basic and diluted earnings per share (unaudited and in
thousands):

<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED                NINE MONTHS ENDED
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
                                                  ---------------------------------- -------------------------------
                                                       1999              2000            1999             2000
                                                  ----------------  ---------------- --------------  ---------------
                                                                      (restated)                       (restated)
<S>                                               <C>               <C>              <C>             <C>
Net income for basic and diluted
  earnings per share                              $       113,151   $     131,838    $   301,955     $    369,656
                                                  ================  ================ ==============  ===============
Weighted average shares for basic
  earnings per share                                      313,719         322,408        313,203          321,221
Dilutive effect of stock options                           10,193          11,273          8,552           11,127
                                                  ----------------  ---------------- --------------  ---------------
Weighted average shares for diluted
  earnings per share                                      323,912         333,681        321,755          332,348
                                                  ================  ================ ==============  ===============

</TABLE>


                                       8
<PAGE>


7.     SELECTED BALANCE SHEET INFORMATION (IN THOUSANDS):

<TABLE>
<CAPTION>

                                                         DECEMBER 31,     SEPTEMBER 30,
                                                             1999              2000
                                                        ---------------- -----------------
                                                                            (unaudited
                                                                           and restated)
<S>                                                     <C>               <C>
Accounts receivable, net:
     Accounts receivable                                $    662,811      $     548,266
     Less allowance for uncollectible accounts               (16,472)           (15,117)
                                                        --------------    ----------------
                                                        $    646,339      $     533,149
                                                        ==============    ================

Inventory:
     Components and subassemblies                       $    183,321      $      194,607
     Finished goods                                            8,549             134,158
                                                        --------------    ----------------
                                                        $    191,870      $      328,765
                                                        ==============    ================
Other assets:
     Financing receivables, net of allowance for losses $    294,677      $      578,357
     Investments in unconsolidated entities                  202,865             413,405
     Deferred income taxes                                   164,979             174,888
     Other                                                   319,625             400,892
                                                        --------------    ----------------
                                                        $    982,146      $    1,567,542
     Less other current assets                              (522,225)           (709,053)
                                                        --------------    ----------------
                                                        $    459,921      $      858,489
                                                        ==============    ================

</TABLE>

8.       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 and adversely affect the Company's business,
financial position, results of operations or cash flows.


                                       9
<PAGE>


9.       SEGMENT DATA:

         The Company's segments are based on geography and, in the United
States (U.S.), by customer class. Geographic segments include the U.S.;
Europe, Middle East, Africa (EMEA); and Asia Pacific (AP). Customer class
segments in the U.S. are Consumer and Business. The Company evaluates the
performance of its Consumer and Business segments based on sales and
operating income, and does not include segment assets or other income and
expense items for management reporting purposes. Management evaluates net
sales by customer class based on units shipped in the period. Non-segment net
sales represent the reconciliation of this methodology to the Company's
revenue recognition policy which is consistent with accounting policies
generally accepted in the United States. Segment operating income includes
selling, general and administrative expenses and other overhead charges
directly attributable to the segment and excludes certain expenses managed
outside the reporting segment. Costs excluded from the segments primarily
consist of general and administrative expenses that are managed on a
corporate-wide basis. Certain net sales and operating expenses for prior
periods have been reclassified to conform with current year presentation.

         The following table sets forth summary information by segment
(unaudited and in thousands):

<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                     SEPTEMBER 30,                          SEPTEMBER 30,
                                          ------------------------------------    ----------------------------------
                                                1999               2000                1999               2000
                                          ------------------  ----------------    ---------------    ---------------
                                                                (restated)                             (restated)
<S>                                       <C>                 <C>                 <C>                <C>
Net sales:
  United States:
    Consumer                              $       1,180,171   $     1,450,430     $    3,175,798     $    3,948,181
    Business                                        799,021           794,782          2,334,250          2,164,431
                                          ------------------  ----------------    ---------------    ---------------
                                                  1,979,192         2,245,212          5,510,048          6,112,612
  EMEA                                              122,046           131,022            381,916            448,999
  AP                                                162,663           172,889            523,214            618,873
  Non-segment                                            --              (833)                --            (26,227)
                                          ------------------  ----------------    ---------------    ---------------
  Consolidated                            $       2,263,901   $     2,548,290     $    6,415,178     $    7,154,257
                                          ==================  ================    ===============    ===============

Operating income:
  United States:
    Consumer                              $         110,371   $       187,022     $      260,023     $      498,230
    Business                                        102,596            96,487            355,996            292,985
                                          ------------------  ----------------    ---------------    ---------------
                                                    212,967           283,509            616,019            791,215
  EMEA                                               (4,069)          (11,053)           (11,456)           (13,584)
  AP                                                  6,141            (8,459)            32,254             15,760
  Non-segment                                       (56,260)          (77,305)          (214,307)          (256,846)
                                          ------------------  ----------------    ---------------    ---------------
  Consolidated                            $         158,779   $       186,692     $      422,510     $      536,545
                                          ==================  ================    ===============    ===============

</TABLE>

10.      NEW ACCOUNTING PRONOUNCEMENTS:

         In June of 1998 the Financial Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" (FAS 133) which
is effective for fiscal years beginning after June 15, 2000. The objective of
the statement is to establish accounting and reporting standards for derivative
instruments and hedging activities. The Company uses foreign currency forward
contracts, a derivative instrument, to hedge foreign currency transactions and
anticipated foreign currency transactions. This pronouncement requires, among
other items, mark-to-market accounting


                                       10
<PAGE>


for certain derivative financial instruments. The Company estimates that the
impact of this pronouncement will result in an after-tax charge of $20 million
in 2001.

         In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." The objective of this SAB is to provide further guidance on
revenue recognition issues in the absence of authoritative literature
addressing a specific arrangement or a specific industry. The financial
impact of this requirement is discussed in Note 3, "Restatement" for the
three and nine month periods ended September 30, 2000.

                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         This Report includes forward-looking statements made 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. There are many factors that affect the Company's
business, consolidated position, results of operations and cash flows, including
the factors discussed or referenced below. All 2000 amounts have been restated
as appropriate. See Note 3 to the Consolidated Financial Statements.

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,
                             ------------------------------------------  -------------------------------------------
                                  1999         CHANGE        2000             1999         CHANGE         2000
                             ---------------- ---------- --------------  ---------------- ---------- ---------------
                                                          (restated)                                   (restated)
                                                             (dollars in thousands)
<S>                              <C>              <C>     <C>                <C>              <C>     <C>
Net sales                        $ 2,263,901      12.6%   $ 2,548,290        $ 6,415,178      11.5%   $   7,154,257
Gross profit                         472,970      22.4%        578,697         1,298,750      22.9%       1,596,570
  Percentage of net sales              20.9%                     22.7%             20.2%                      22.3%
Selling, general and
  administrative expenses            314,191      24.8%        392,005           876,240      21.0%       1,060,025
  Percentage of net sales              13.9%                     15.4%             13.7%                      14.8%
Operating income                     158,779      17.6%        186,692           422,510      27.0%         536,545
  Percentage of net sales               7.0%                      7.3%              6.6%                       7.5%
Net income before
cumulative effect of change
in accounting principle          $   113,151      16.5%   $    131,838       $   301,955      26.3%   $     381,507

</TABLE>

NET SALES

         Gateway consolidated net sales increased to $2.5 billion and $7.2
billion in the third quarter and first nine months of 2000, respectively. For
the third quarter of 2000, domestic sales grew by 13.4% while international
sales increased by 6.7% as compared to the third quarter of 2000.

         The following table summarizes the Company's net sales, for the periods
indicated, by geographic region:

<TABLE>
<CAPTION>

                                      THREE MONTHS ENDED                            NINE MONTHS ENDED
                                        SEPTEMBER 30,                                 SEPTEMBER 30,
                         --------------------------------------------- ---------------------------------------------
                              1999         CHANGE          2000             1999           CHANGE         2000
                         --------------- ----------- ----------------- ----------------  ----------- ---------------
                                                        (restated)                                     (restated)
                                                             (dollars in thousands)
<S>                      <C>               <C>       <C>               <C>                 <C>       <C>
Net sales
  United States          $    1,979,192    13.4%     $      2,245,212  $     5,510,048     10.9%     $    6,112,612
  Europe                        122,046     7.4%              131,022          381,916     17.6%            448,999
  Asia Pacific                  162,663     6.3%              172,889          523,214     18.3%            618,873
  Non-segment                        --      --                  (833)              --        --            (26,227)
                         --------------- ----------- ----------------- ----------------  ----------- ---------------
  Consolidated           $    2,263,901    12.6%     $     2,548,290   $     6,415,178     11.5%     $    7,154,257
                         =============== =========== ================= ================  =========== ===============

</TABLE>


                                       12
<PAGE>


         In the United States, net sales growth was led by the consumer
segment with an increase of 23% over the third quarter of 1999 while the
business segment was flat. Consumer sales growth was driven by growth in all
sales channels. The Gateway Country-Registered Trademark- stores retail
channel added 35 stand-alone locations bringing the worldwide total to 384
locations at the end of the third quarter of 2000. In addition to the new
Gateway Country store locations, the Company continued to develop the
OfficeMax, Inc. strategic alliance by opening Gateway Country stores inside
of 294 OfficeMax stores by quarter's end, an increase of 202 from the end of
the second quarter of 2000. Beyond-the-box revenue including software and
peripheral sales, Internet access and portal income, financing, warranty and
training revenue accounted for more than 50% of income for the third quarter
of 2000. Gateway's sales to businesses was flat in the third quarter compared
with last year as the Company continued to refocus its efforts on sales to
small and medium businesses and government and education institutions, which
are Gateway's core target markets in the business space. Gateway Business
performance was driven by a doubling of the number of business sales
representatives servicing small business in Gateway Country stores and
enhanced business products and solutions, training, and local service support
through the Gateway Networking Solutions Program.

         Sales in the European, Middle East, African ("EMEA") segment and Asia
Pacific region were $131.0 million and $172.9 million, respectively, in the
third quarter of 2000, representing increases of 7% and 6%, respectively, over
the third quarter of 1999. The growth in EMEA and Asia Pacific was due to the
expansion in the number of store-with-in-a-store outlets as the Company ended
the quarter with 275 retail outlets in EMEA and 100 in Asia Pacific.

GROSS PROFIT

         As a result of the restatement, including an increase of $14 million
in the allowance related to the finance receivables partially offset by other
adjustments, gross profit decreased approximately $4.9 million to $578.7
million from the previously reported $583.6 million. Subsequent to the
restatement, gross profit in the third quarter of 2000 increased 22% over the
comparable period of 1999 to $578.7 million and increased 23% over the first
nine months of 1999 to $1.6 billion. Margin productivity was driven by the
diversified revenue stream provided by the Company's beyond-the-box strategy
discussed above, favorable component prices, and productivity gains from Six
Sigma initiatives. As a percentage of sales, gross profit for the third
quarter of 2000 was 22.7%, up from 20.9% in the third quarter of 1999,
representing the eleventh consecutive quarter of year-over-year gross profit
improvement.

         The Company's consumer financing operations are reported as net
revenues in the case of interest and fee income and cost of sales in the case of
service fees and loan loss expense. The Company's finance receivables increased
from $295 million at the end of 1999 to $578 million at September 30, 2000. The
Company continually revises its estimate for the allowance related to losses
based on information provided by its loan-servicing partner and through tracking
the performance of its various finance programs. The Company significantly
increased its allowance during the course of 2000 due to the increased
participation of the Company in purchasing finance receivables for its own
account and the expansion of the consumer finance program to higher risk
categories.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative (SG&A) expenses for the third
quarter and first nine months of 2000 increased 25% and 21%, respectively,
compared to the same periods of 1999. As a percentage of sales, SG&A expenses
were 15.4% for the third quarter of 2000, compared to 13.9% in the third quarter
of 1999.

OPERATING INCOME

         After giving effect to the increase in the allowance related to
finance receivables and other adjustments included in the restatement in Note
3, operating income increased to $186.7 million, representing an increase of
18% over the third quarter of 1999. As discussed above, operating income was
favorably impacted by gross margin improvement and effective expense
productivity. As a percentage of sales, operating income increased to 7.3%
from 7.0% in the third quarter of

                                       13
<PAGE>


1999. Recurring profits from the beyond-the-box strategy, including Internet
access and portal income, financing and warranty revenue totaled more than 25%
of third quarter operating income. Operating income for the consumer and
business segments in the United States was $187.0 million and $96.5 million,
respectively, in the third quarter of 2000. For the first nine months of 2000,
operating income was $536.5 million, an increase of 27% over the first nine
months of 1999.

OTHER INCOME

         Other income includes other income net of expenses, such as interest
income and expense and foreign exchange transaction gains and losses. Other
income decreased to $17.7 million from $18.0 million in the same period of 1999.
For the first nine months of 2000, other income increased to $54.9 million from
$49.3 million reported in the comparable 1999 period.

INCOME TAXES

         The Company's annualized effective tax rate was 35.5% for the third
quarter of 2000, a decrease from the 36% rate for the third quarter of 1999. The
effective tax rate for 2000 is consistent with the 1999 annual effective rate
which reflects a favorable impact from shifts in the geographic distribution of
the Company's earnings.

LIQUIDITY AND CAPITAL RESOURCES

         The following table presents selected financial statistics and
information for the periods indicated:

<TABLE>
<CAPTION>

                                                                          SEPTEMBER 30,
                                                  ---------------------------------------------------------------
                                                               1999                             2000
                                                  --------------------------------   ----------------------------
                                                                                             (restated)
                                                                      (dollars in thousands)
      <S>                                            <C>                              <C>
      Cash and marketable securities                 $      1,215,025                 $        982,872
      Days of sales in accounts receivable                         28                               19
      Days inventory on hand                                        7                               15
      Days in accounts payable                                     43                               42
      Cash conversion cycle                                        (8)                              (8)

</TABLE>

         At September 30, 2000, the Company had cash and cash equivalents of
$850.0 million, marketable securities of $132.9 million and an unsecured
committed credit facility with certain banks aggregating $300 million,
consisting of a revolving line of credit facility and a sub-facility for letters
of credit. At September 30, 2000, no amounts were outstanding under the
revolving line of credit. The Company has a universal shelf registration
statement which contemplates that the Company may from time to time sell up to
$1.0 billion of debt or equity securities, which will provide the Company with
greater flexibility to respond to acquisition and market opportunities.
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.


                                       14
<PAGE>


         The Company generated $427.0 million in cash from operations during
the first nine months of the year, including $514.9 million of net income
adjusted for non-cash items. Other significant factors affecting available
cash include an increase in inventory levels of $136.9 million, and a $98.1
million decrease in accounts receivable. The Company used approximately
$236.6 million for the construction of new facilities, information systems
and equipment and $276.5 million to purchase financing receivables, net of
repayment proceeds and $246.9 million in investment in unconsolidated
entities, which includes $150 million in Consumer Financial Network
convertible preferred stock and $50 million of Office Max, Inc. convertible
preferred stock. Finance receivables, net of allowance for loan losses,
increased to $585.8 million as of September 30, 2000 and is expected to
continue to grow as the Company continues to finance the sale of its products
and services. As discussed previously, the Company continued to expand the
retail Gateway Country-Registered Trademark- stores bringing the total number
of stores worldwide to 384 as of September 30, 2000. The Company anticipates
that it will retain all earnings in the foreseeable future for future
development of its business and will not distribute earnings to its
stockholders as dividends.

         At September 30, 2000, the Company had long-term indebtedness and
capital lease obligations of approximately $2.8 million. These obligations
relate principally to the Company's investments in equipment and facilities.

NEW ACCOUNTING PRONOUNCEMENTS

         In June of 1998 the Financial Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" (FAS 133) which
is effective for fiscal years beginning after June 15, 2000. The objective of
the statement is to establish accounting and reporting standards for derivative
instruments and hedging activities. The Company uses foreign currency forward
contracts, a derivative instrument, to hedge foreign currency transactions and
anticipated foreign currency transactions. This pronouncement requires, among
other items, mark-to-market accounting for certain derivative instruments. The
Company estimates that the impact of this pronouncement will result in an
after-tax charge of $20 million in 2001.

         In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." The objective of this SAB is to provide further guidance on
revenue recognition issues in the absence of authoritative literature
addressing a specific arrangement or a specific industry. The financial
impact of this requirement is discussed in Note 3, "Restatement" for the
three and nine month periods ended September 30, 2000.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         Factors that could impact the Company's business, consolidated
financial position, results of operations and cash flows and cause future
results to differ from the Company's expectations include the following:
competitive market conditions; component supply shortages; short product cycles
and the ability of the Company to develop products based on new or evolving
technology or new form factors such as internet appliances; access to
technology; infrastructure requirements; risks of international expansion;
foreign currency fluctuations; the success of e-commerce; risks of minority
investments; risks of acquisitions and joint ventures; results of financing
customer orders; increased inventory costs; and changes in customer or
geographic sales mix; as well as risks identified in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 and other filings with
the Securities and Exchange Commission.

         The Company has experienced, and may continue to experience, 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. These problems
can result in high backlog of product orders, delays in customer support
response times and increased expense levels.


                                       15
<PAGE>


         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 is no assurance that the Company
will continue to have access to or the right to use new technology or will be
successful in incorporating such new technology in its products or features in a
timely manner.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         There has not been a material change in the Company's exposure to
foreign currency risks since December 31, 1999.


                                       16
<PAGE>


                              II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          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 and adversely affect the Company's business,
consolidated financial position, results of operations or cash flows.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS:

      EXHIBIT
        NO.                      DESCRIPTION OF EXHIBITS
        ---                      -----------------------
         10.19    Form of Executive Officer Change of Control Compensation
                  Agreement filed as Exhibit 10.19 to the Form 10-Q for the
                  quarter ended September 30, 2000.
         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, 2000.


                                       17
<PAGE>


                                    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, INC.


Date: March 1, 2001        By:  /s/ Joseph Burke
                               -------------------------------------------------
                               Joseph Burke
                               Senior Vice President and Chief Financial Officer
                               (authorized officer and chief financial officer)

                            By:  /s/ Robert D. Manza
                               -------------------------------------------------
                               Robert D. Manza
                               Vice President and Controller
                               (principal accounting officer)



                                       18
<PAGE>


    EXHIBIT              INDEX TO EXHIBITS
      NO.
      ---

      27.1        Financial Data Schedule



                                       19