<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 JUNE 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 August 9, 2000, there were 322,257,139 shares of the Common Stock
of the Company, $.01 par value per share, outstanding. As of August 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 June 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 STATEMENTS OF
                     OPERATIONS FOR THE THREE AND SIX MONTHS
                          ENDED JUNE 30, 1999 AND 2000
                    (in thousands, except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED JUNE 30,               SIX MONTHS ENDED JUNE 30,
                                                 ----------------------------------------- -----------------------------------------
                                                        1999                 2000                  1999                  2000
                                                 ------------------- --------------------- --------------------- -------------------
                                                                          (restated)                                  (restated)
<S>                                              <C>                 <C>                   <C>                    <C>
Net sales                                            $  1,969,376          $  2,207,017          $  4,151,277          $  4,605,967
Cost of goods sold                                      1,572,694             1,707,646             3,325,497             3,588,094
                                                 ------------------- --------------------- --------------------- -------------------
     Gross profit                                         396,682               499,371               825,780             1,017,873
Selling, general and administrative expenses              273,759               335,782               562,049               668,020
                                                 ------------------- --------------------- --------------------- -------------------
     Operating income                                     122,923               163,589               263,731               349,853
Other income, net                                          16,491                19,633                31,275                37,232
                                                 ------------------- --------------------- --------------------- -------------------
     Income before income taxes and
       cumulative effect of change in
       accounting principle                               139,414               183,222               295,006               387,085
Provision for income taxes                                 50,189                65,044               106,202               137,416
                                                 ------------------- --------------------- --------------------- -------------------
     Net income before cumulative effect of
       change in accounting principle                $     89,225          $    118,178          $    188,804          $    249,669
                                                 ------------------- --------------------- --------------------- -------------------

Cumulative effect of change in accounting
      principle, net                                           --                    --                    --              (11,851)
                                                 ------------------- --------------------- --------------------- -------------------
     Net income                                      $     89,225          $    118,178          $    188,804          $    237,818
                                                 =================== ===================== ===================== ===================


     Net income per share before cumulative
      effect of change in accounting
       principle:
        Basic                                        $       0.28          $       0.37          $       0.60          $       0.78
                                                 =================== ===================== ===================== ===================
        Diluted                                      $       0.28          $       0.36          $       0.59          $       0.75
                                                 =================== ===================== ===================== ===================
     Net income per share after cumulative
      effect of change in accounting principle:
        Basic                                        $       0.28          $       0.37          $       0.60          $       0.74
                                                 =================== ===================== ===================== ===================
        Diluted                                      $       0.28          $       0.36          $       0.59          $       0.72
                                                 =================== ===================== ===================== ===================
     Weighted average shares outstanding:
        Basic                                             312,886               321,265               312,940               320,639
                                                 =================== ===================== ===================== ===================
        Diluted                                           320,314               331,727               320,754               332,076
                                                 =================== ===================== ===================== ===================

</TABLE>

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

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,       JUNE 30,
                                                                                      1999             2000
                                                                                 ---------------  ----------------
                                                                                                  (unaudited and
                                                                                                     restated)
<S>                                                                               <C>             <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                      $ 1,127,654        $  732,261
     Marketable securities                                                              208,717           206,688
     Accounts receivable, net                                                           646,339           524,395
     Inventory                                                                          191,870           319,455
     Other                                                                              522,225           471,835
                                                                                 ---------------  ----------------
             Total current assets                                                     2,696,805         2,254,634
Property, plant and equipment, net                                                      745,660           821,181
Intangibles, net                                                                         52,302           196,444
Other assets                                                                            459,921           798,939
                                                                                 ---------------  ----------------
                                                                                    $ 3,954,688       $ 4,071,198
                                                                                 ===============  ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Notes payable and current maturities of long-term obligations                    $   5,490         $   4,244
     Accounts payable                                                                   898,436           739,772
     Accrued liabilities                                                                609,132           447,974
     Accrued royalties payable                                                          153,840           167,338
     Other current liabilities                                                          142,812           216,719
                                                                                 ---------------  ----------------
             Total current liabilities                                                1,809,710         1,576,047
Long-term obligations, net of current maturities                                          2,998             1,286
Warranty and other liabilities                                                          124,862           171,168
                                                                                 ---------------  ----------------
             Total liabilities                                                        1,937,570         1,748,501
                                                                                 ---------------  ----------------
Commitments and Contingencies (Note 7)
Stockholders' equity:
     Preferred Stock, $.01 par value, 5,000 shares authorized; none
       issued and outstanding                                                                 -                 -
     Class A Common Stock, nonvoting, $.01 par value, 1,000 shares
       authorized; none issued and outstanding                                                -                 -
     Common Stock, $.01 par value, 1,000,000 shares authorized;
       320,016 shares and 322,363 shares issued
        in 1999 and 2000, respectively                                                    3,200             3,224
     Additional paid-in capital                                                         656,870           691,148
     Treasury stock, at cost, 730 shares and 198 shares in 1999 and 2000,
       respectively                                                                    (51,796)          (11,767)
     Retained earnings                                                                1,408,852         1,646,670
     Accumulated other comprehensive loss                                                   (8)           (6,578)
                                                                                 ---------------  ----------------
             Total stockholders' equity                                               2,017,118         2,322,697
                                                                                 ---------------  ----------------
                                                                                    $ 3,954,688       $ 4,071,198
                                                                                 ===============  ================
</TABLE>

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


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED JUNE 30,
                                                                        -----------------------------------
                                                                              1999              2000
                                                                        -----------------  ----------------
                                                                                             (restated)
<S>                                                                     <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                                              $ 188,804         $ 237,818
     Adjustments to reconcile net income to net
       cash provided by operating activities:
         Depreciation and amortization                                          65,256            91,331
         Provision for uncollectible accounts receivable                         6,564             9,394
         Deferred income taxes                                                 (25,725)           (6,983)
         Other, net                                                                518            (2,736)
         Changes in operating assets and liabilities:
            Accounts receivable                                                (32,594)          112,550
            Inventory                                                           46,472          (127,585)
            Other assets                                                       (29,900)           35,399
            Accounts payable                                                    (6,102)         (159,822)
            Accrued liabilities                                                 51,687          (163,707)
            Accrued royalties                                                   (5,713)           13,498
            Other current liabilities                                            9,363           107,588
            Other liabilities                                                      581            23,704
                                                                        -----------------  ----------------
                  Net cash provided by operating activities                    269,211           170,449
                                                                        -----------------  ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                     (151,833)         (153,579)
     Investments in unconsolidated entities                                    (91,726)         (246,900)
     Purchases of available-for-sale securities                                (82,739)          (73,665)
     Proceeds from maturities of available-for-sale securities                  73,787            76,941
     Purchase of financing receivables                                         (66,024)         (323,124)
     Proceeds from repayment of financing receivables                                -           196,198
     Purchase of note receivable                                                     -           (50,000)
     Other, net                                                                  1,408             2,372
                                                                        -----------------  ----------------
         Net cash used in investing activities                                (317,127)         (571,757)
                                                                        -----------------  ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Purchase of treasury stock                                                (70,784)          (37,045)
     Principal payments on long-term obligations and notes payable              (8,015)           (2,958)
     Stock options exercised                                                    21,133            45,264
                                                                        -----------------  ----------------
         Net cash (used in) provided by financing activities                   (57,666)            5,261
Foreign exchange effect on cash and cash equivalents                            (3,308)              654
                                                                        -----------------  ----------------
Net decrease in cash and cash equivalents                                     (108,890)         (395,393)
Cash and cash equivalents, beginning of period                               1,169,810         1,127,654
                                                                        -----------------  ----------------
Cash and cash equivalents, end of period                                   $ 1,060,920         $ 732,261
                                                                        =================  ================
</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 June 30, 2000 and for the three and six
months ended June 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,
regardless of whether legal title has transferred. 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 second quarter results have been restated as follows:

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                        JUNE 30, 2000                        JUNE 30,2000
                                                     AS               AS                   AS                 AS
                                                  REPORTED         RESTATED             REPORTED           RESTATED
                                                  --------         --------             --------           --------
<S>                                              <C>            <C>                    <C>               <C>
Net sales                                        $ 2,141,875    $  2,207,017           $  4,479,759      $  4,605,967
Gross profit                                         498,329         499,371              1,026,466         1,017,873
Operating income                                     168,641         163,589                361,842           349,853
Net income before cumulative effect of
  change in accounting principle                     121,638         118,178                257,671           249,669
Cumulative effect of change in accounting
   principle                                              --              --                     --          (11,851)
Net income                                           121,638         118,178                257,671           237,818

</TABLE>

                                       5

<PAGE>

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

<TABLE>
<CAPTION>
                                                                      SECOND          YEAR TO
                                                                      QUARTER           DATE
                                                                  --------------    -------------
<S>                                                               <C>               <C>
ADJUSTMENTS IMPACTING NET INCOME

Net Sales
   Accounting pronouncements (1)                                       $ (3,123)       $ (29,369)
   Foreign subsidiary adjustments (3)                                    (8,440)         (10,710)
   Other adjustments (4)                                                   (200)          (6,849)
                                                                   -------------- -- -------------
   TOTAL REVISIONS TO NET SALES                                       $ (11,763)       $ (46,928)
                                                                   -------------- -- -------------
Gross profit
   Accounting pronouncements (1)                                         (3,930)          (9,483)
   Foreign subsidiary adjustments (3)                                      (422)            (536)
   Other adjustments (4)                                                   (200)          (1,303)
                                                                   -------------- -- -------------
   TOTAL REVISIONS TO GROSS PROFIT                                      $(4,552)       $ (11,322)
                                                                   -------------- -- -------------
Operating income
   Accounting pronouncements (1)                                         (3,930)          (9,483)
   Foreign subsidiary adjustments (3)                                      (422)            (536)
   Other adjustments (4)                                                   (700)          (1,970)
                                                                   -------------- -- -------------
   TOTAL REVISIONS TO OPERATING INCOME                                 $ (5,052)       $ (11,989)
                                                                   -------------- -- -------------
Net income
   Accounting pronouncements (1)                                         (2,535)          (6,117)
   Foreign subsidiary adjustments (3)                                      (272)            (347)
   Other adjustments (4)                                                   (653)          (1,538)
                                                                   -------------- -- -------------
   TOTAL REVISIONS TO NET INCOME BEFORE CUMULATIVE
    EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                           $ (3,460)        $ (8,002)
                                                                   -------------- -- -------------
Cumulative effect of change in accounting principle                           --         (11,851)

Total revisions to net income                                          $ (3,460)       $ (19,853)

TOTAL REVISIONS TO NET INCOME (LOSS) PER DILUTED SHARE                 $  (0.01)        $  (0.05)

ADJUSTMENTS NOT IMPACTING NET INCOME (2)

TOTAL REVISIONS TO NET SALES                                              76,905          173,136

TOTAL REVISIONS TO GROSS PROFIT                                            5,594            2,727

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 and second 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.


4. 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 six month periods
ended June 30, 1999 and 2000 was as follows (unaudited and in thousands):

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

Net income                                            $  89,225        $  118,178      $ 188,804        $ 237,818
Foreign currency translation                               (510)           (1,000)        (2,556)            (505)
Unrealized loss on available-for-sale securities           (359)           (4,853)            (1)          (6,065)
                                                  ----------------  ---------------- --------------  ---------------

Total Comprehensive Income                            $  88,356        $  112,325      $ 186,247        $ 231,248
                                                  ================  ================ ==============  ===============
</TABLE>

                                       7
<PAGE>

5. 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                SIX MONTHS ENDED
                                                              JUNE 30,                          JUNE 30,
                                                  ---------------------------------- -------------------------------
                                                       1999              2000            1999             2000
                                                  ----------------  ---------------- --------------  ---------------
                                                                      (restated)                       (restated)
<S>                                               <C>               <C>              <C>             <C>
Net income                                             $ 89,225         $ 118,178      $ 188,804        $ 237,818
                                                  ================  ================ ==============  ===============
Weighted average shares for basic
   Earnings per share                                   312,886           321,265        312,940          320,639
Dilutive effect of stock options                          7,428            10,462          7,814           11,437
                                                  ----------------  ---------------- --------------  ---------------
Weighted average shares for diluted
   Earnings per share                                   320,314           331,727        320,754          332,076
                                                  ================  ================ ==============  ===============
</TABLE>

6. SELECTED BALANCE SHEET INFORMATION (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                       DECEMBER 31,         JUNE 30,
                                                          1999                2000
                                                    ------------------  ------------------
                                                                         (unaudited and
                                                                           restated)
<S>                                                 <C>                 <C>
Accounts receivable, net:
     Accounts receivable                                 $   662,811        $   537,772
     Less allowance for uncollectible accounts               (16,472)           (13,377)
                                                    ------------------  ------------------
                                                         $   646,339        $   524,395
                                                    ==================  =================

Inventory:
     Components and subassemblies                        $   183,321        $   201,379
     Finished goods                                            8,549            118,076
                                                    ------------------  -----------------
                                                         $   191,870        $   319,455
                                                    ==================  =================
</TABLE>

7. 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.

                                       8

<PAGE>

8.       STRATEGIC INVESTMENTS AND ALLIANCES:

         During the first quarter of 1999, the Company paid $77.7 million for
a 19.9% interest and an option to acquire the remaining 80.1% interest in
NECX Direct, LLC, an on-line e-commerce computer peripheral retailer. The
Company subsequently sold half of that interest to a third party. During the
first quarter of 2000, the Company issued 537,554 shares of common stock to
exercise its option to purchase the remaining 80.1% interest and entered into
an agreement to pay approximately $20 million in future periods. The
transaction was accounted for as a purchase business combination. The
aggregate purchase price of approximately $155.0 million, which includes the
cost basis of the original investment and liabilities assumed, has been
allocated primarily to goodwill that is being amortized over a ten year
period. Pro forma statements of operations reflecting the acquisition of NECX
are not shown as they would not differ materially from reported results.

         During the second quarter of 2000, the Company entered into an
agreement with OfficeMax, Inc. that provides for the installation of a Gateway
store inside of all OfficeMax locations in the United States. As a part of this
transaction, the Company invested $50 million in OfficeMax, Inc. convertible
preferred stock on April 28, 2000. In addition, the Company entered into an
agreement with Consumer Financial Network ("CFN") to jointly market PCs,
Internet access, financing, training and other PC-related products and services
to corporations providing their employees with Internet-based services both in
the office and at home. As part of this transaction, the Company invested $150
million in CFN convertible preferred stock.

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.


                                      9
<PAGE>

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

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                       JUNE 30,                               JUNE 30,
                                          ------------------------------------    ----------------------------------
                                                1999               2000                1999               2000
                                          ------------------  ----------------    ---------------    ---------------
                                                                (restated)                             (restated)
<S>                                       <C>                 <C>                 <C>                <C>
Net sales:
  United States:
    Consumer                                    $   836,502       $ 1,106,567        $ 1,995,627        $ 2,497,751
    Business                                        830,852           749,064          1,535,229          1,369,649
                                          ------------------  ----------------    ---------------    ---------------
                                                  1,667,354         1,855,631          3,530,856          3,867,400
  EMEA                                              114,294           129,714            259,870            317,977
  AP                                                187,728           226,585            360,551            445,984
  Non-segment                                            --           (4,913)                 --           (25,394)
                                          ------------------  ----------------    ---------------    ---------------
  Consolidated                                 $  1,969,376       $ 2,207,017        $ 4,151,277        $ 4,605,967
                                          ==================  ================    ===============    ===============

Operating income:
  United States:
    Consumer                                    $    53,269        $  139,954         $  149,652         $  311,208
    Business                                        139,619           112,395            253,400            196,498
                                          ------------------  ----------------    ---------------    ---------------
                                                    192,888           252,349            403,052            507,706
  EMEA                                              (5,998)           (4,632)            (7,387)            (2,531)
  AP                                                 13,636             9,987             26,113             24,219
  Non-segment                                      (77,603)          (94,115)          (158,047)          (179,541)
                                          ------------------  ----------------    ---------------    ---------------
  Consolidated                                  $   122,923        $  163,589         $  263,731         $  349,853
                                          ==================  ================    ===============    ===============
</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 for
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 six months ended June 30, 2000.

                                      10
<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

         Strong consumer growth and strong international sales coupled with
expansion of beyond the box revenue, decreasing component costs, and improved
productivity drove net income to $118 million, representing a 32% increase over
the same period in 1999. 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                           SIX MONTHS ENDED
                                             JUNE 30,                                     JUNE 30,
                             ------------------------------------------  -------------------------------------------
                                  1999         CHANGE        2000             1999         CHANGE         2000
                             ---------------- ---------- --------------  ---------------- ---------- ---------------
                                                          (restated)                                   (restated)
                                                             (dollars in thousands)
<S>                          <C>              <C>        <C>             <C>              <C>         <C>
Net sales                        $ 1,969,376      12.1%    $ 2,207,017       $ 4,151,277      11.0%     $ 4,605,967
Gross profit                         396,682      25.9%        499,371           825,780      23.3%       1,017,873
  Percentage of net sales              20.1%                     22.6%             19.9%                      22.1%
Selling, general and
  administrative expenses            273,759      22.7%        335,782           562,049      18.9%         668,020
  Percentage of net sales              13.9%                     15.2%             13.5%                      14.5%
Operating income                     122,923      33.1%        163,589           263,731      32.7%         349,853
  Percentage of net sales               6.2%                      7.4%              6.4%                       7.6%
Net income before
   cumulative effect of
   change in accounting
   principle                      $   89,225      32.4%     $  118,178        $  188,804      32.2%      $  249,669
</TABLE>

NET SALES

         Gateway consolidated net sales increased to $2.2 billion and $4.6
billion in the second quarter and first six months of 2000, respectively,
representing an increase in unit shipments of 16% over the comparable periods of
1999. For the second quarter, domestic sales grew by 11% while international
sales increased by 18% during the same period.


                                      11
<PAGE>

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

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED                             SIX MONTHS ENDED
                                           JUNE 30,                                      JUNE 30,
                         --------------------------------------------- ---------------------------------------------
                              1999         CHANGE          2000             1999           CHANGE         2000
                         --------------- ----------- ----------------- ----------------  ----------- ---------------
                                                        (restated)                                     (restated)
                                                           (dollars in thousands)
<S>                      <C>             <C>         <C>               <C>               <C>         <C>
Net sales
  United States             $ 1,667,354    11.3%         $  1,855,631     $  3,530,856      9.5%        $ 3,867,400
  EMEA                          114,294    13.5%              129,714          259,870     22.4%            317,977
  AP                            187,728    20.7%              226,585          360,551     23.7%            445,984
  Non-segment                        --      --               (4,913)               --       --            (25,394)
                         --------------- ----------- ----------------- ----------------  ----------- ---------------
  Consolidated              $ 1,969,376    12.1%         $  2,207,017     $  4,151,277     11.0%        $ 4,605,967
                         =============== =========== ================= ================  =========== ===============
</TABLE>

         In the United States, net sales growth was led by the consumer
segment with an increase of 32% over the second quarter of 1999 while the
business segment declined 10%. Consumer sales growth was driven by growth in
telephone, Gateway Country-Registered Trademark- store expansion and Internet
sales. The Gateway Country stores retail channel added 31 stand-alone
locations bringing the worldwide total to 349 locations at the end of the
second 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 92 OfficeMax stores by
quarter's end, an increase of 80 from the end of the first quarter of 2000.
Beyond-the-box revenue including software and peripheral sales, Internet
access and portal income, financing, warranty and training revenue accounted
for 40% of income for the second quarter of 2000, up over 100% from the
second quarter of 1999. Gateway's sales to businesses declined 10% in the
second 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. Sequentially, Gateway Business performance showed improvement
over the first quarter sales decline of 12% and management is targeting flat
growth in the third quarter and positive growth in the fourth quarter of 2000.

         Sales in the European, Middle East, African ("EMEA") segment and Asia
Pacific region were $129.7 million and $226.6 million, respectively, in the
second quarter of 2000, representing increases of 14% and 21%, respectively,
over the second 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 230 retail outlets in EMEA and 87 in Asia Pacific.

GROSS PROFIT

         Gross profit in the second quarter of 2000 increased 26% over the
comparable period of 1999 to $499.4 million and increased 23% over the first six
months of 1999 to over $1.0 billion. Margin productivity was driven by the
diversified revenue stream provided by the Company's beyond-the-box strategy
discussed above, favorable component prices, effective PC pricing management and
productivity gains from Six Sigma initiatives. As a percentage of sales, gross
profit for the second quarter of 2000 was 22.6%, up from 20.1% in the second
quarter of 1999, representing the tenth consecutive quarter of year-over-year
gross profit improvement.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative (SG&A) expenses for the second
quarter and first six months of 2000 increased 23% and 19%, respectively,
compared to the same periods of 1999. The Company has launched several Six Sigma
initiatives to re-engineer core processes and limit headcount additions to
increase SG&A productivity.

                                      12

<PAGE>

OPERATING INCOME

         Operating income increased nearly three times revenue growth to $163.6
million, representing an increase of 33% over the second quarter of 1999. As
discussed above, operating income was favorably impacted by gross margin
improvement. As a percentage of sales, operating income increased to 7.4% from
6.2% in the second quarter of 1999. Recurring profits from the beyond-the-box
strategy, including Internet access and portal income, financing and warranty
revenue totaled 20% of second quarter operating income. Operating income for the
consumer and business segments in the United States was $140.0 million and
$112.4 million, respectively, in the second quarter of 2000. Consumer segment
operating profit growth was 163% over the second quarter of 1999 while the
business segment operating income declined 20% in the same period. For the first
six months of 2000, operating income was $349.9 million, an increase of 33% over
the first six 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 increased to $19.6 million from $16.5 million in the same period of 1999.
For the first six months of 2000, other income increased to $37.2 million from
$31.3 million reported in the comparable 1999 period. The increases were
primarily due to the additional investment income generated by cash balances and
marketable securities.

INCOME TAXES

         The Company's annualized effective tax rate was 35.5% for the second
quarter of 2000, a decrease from the 36% rate for the second 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>
                                                                    THREE MONTHS ENDED JUNE 30,
                                                  ---------------------------------------------------------------
                                                               1999                             2000
                                                  --------------------------------   ----------------------------
                                                                            (restated)
                                                                      (dollars in thousands)
<S>                                               <C>                                <C>
      Cash and marketable securities                        $ 1,228,319                       $ 938,949
      Days of sales in accounts receivable                      27                               21
      Days inventory on hand                                     8                               15
      Days in accounts payable                                  41                               39
      Cash conversion cycle                                     (6)                              (3)
</TABLE>


                                      13
<PAGE>

      At June 30, 2000, the Company had cash and cash equivalents of $732.3
million, marketable securities of $206.7 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
June 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.

         The Company generated $170.5 million in cash from operations during
the first six months of the year, including $328.8 million of net income
adjusted for non-cash items. Other significant factors affecting available
cash include an increase in inventory levels of $127.6 million, a decrease of
accounts payable and other liabilities of $178.7 million and a $112.6 million
decrease in accounts receivable. The Company used approximately $153.6
million for the construction of new facilities, information systems and
equipment and $126.9 million to purchase financing receivables, net of
proceeds received for payment, 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. As discussed previously, the Company continued
to expand the retail Gateway Country-Registered Trademark- stores bringing
the total number of stores worldwide to 349 as of June 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 June 30, 2000, the Company had long-term indebtedness and capital
lease obligations of approximately $5.5 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 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 six months ended June 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;
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; 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.

                                      14
<PAGE>

         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.

         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.



                                      15
<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 4.   SUBMISSION TO A VOTE OF SECURITY HOLDERS

          The Company's Annual Meeting of Stockholders was held on May 18, 2000.
At the meeting, stockholders elected three Class I directors of the Company and
approved the Gateway, Inc. 2000 Equity Incentive Plan. The results of
stockholder voting are as follows:

<TABLE>
<CAPTION>
                                                  Votes              Votes            Withheld/           Broker
                                                   For              Against          Abstentions        Non-Votes
<S>                                            <C>               <C>                 <C>                <C>
1.     Election of Directors
           Charles G. Carey                    274,358,165                           10,206,556
           James F. McCann                     274,344,115                           10,220,606
           Theodore W. Waitt                   273,206,803                           11,357,918

2.     Approval of the Gateway, Inc. 2000
       Equity Incentive Plan
                                               175,786,157        72,393,432          1,680,740         34,704,392
</TABLE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS:

<TABLE>
<CAPTION>
    EXHIBIT                                          DESCRIPTION OF EXHIBITS
      NO.
<S>             <C>
     10.18      Gateway, Inc. 2000 Equity Incentive Plan (filed with the Form 10-Q for the quarter
                ended June 30, 2000)
      27.1      Financial Data Schedule, filed herewith
</TABLE>

     (b)  REPORTS ON FORM 8-K:

         No Reports on Form 8-K were filed by the Company during the quarter
ended June 30, 2000.



                                      16
<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.

<TABLE>
<S>                                 <C>
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)
</TABLE>

                                      17
<PAGE>

                              INDEX TO EXHIBITS
<TABLE>
<CAPTION>
    EXHIBIT
      NO.
<S>               <C>
     10.18        Gateway 2000, Inc. Equity Incentive Plan (filed with the Form 10-Q for the quarter
                  ended June 30, 2000)

      27.1        Financial Data Schedule, filed herewith
</TABLE>

                                      18