Opinion ID: 219549
Heading Depth: 3
Heading Rank: 3

Heading: The AOL Transaction

Text: In the third quarter of 2000, Gateway and AOL contractually changed the timing of when fees were payable by AOL to Gateway. Prior to the change, AOL agreed to pay a fee to Gateway whenever a buyer of a Gateway computer registered with AOL. Under the modified agreement, the AOL fees were payable as soon as a Gateway computer was shipped to a customer, permitting Gateway to book revenue upon shipment. While the transaction itself was not improper, it gave Gateway a one-time revenue boost of $72 million. The SEC claimed that Weitzen misrepresented Gateway's growth as accelerated in the conference call with analysts and in a press release when he did not disclose that the third-quarter revenue was based in part on this unusual, one-time transaction, rather than on ordinary sales growth.