Gateway, Inc., did not declare or pay any dividends during fiscal 1999 or
fiscal 1998. What do you suppose is the primary reason for this?
At that time, the new tech companies didn't pay dividends. They needed all the money to continue pay their start up costs and contine expanding their businesses.
Were they making money? What were there capital expenses? When did they start paying dividends?
http://quicktake.morningstar.com/stocknet/cashflow10.aspx?Country=USA&Symbol=GTW
The primary reason for Gateway, Inc. not declaring or paying any dividends during fiscal 1999 or fiscal 1998 could be due to several factors. To determine the exact reason, there are a few steps you can take:
1. Review the financial statements: Start by examining the company's financial statements for those fiscal years. Look at the income statement, balance sheet, and cash flow statement. Pay attention to key financial indicators such as profitability, cash flow, and debt levels. This will provide insights into the company's financial position.
2. Analyze the cash flow: Focus on the cash flow statement to understand if the company generated sufficient cash from operating activities to support dividend payments. Dividends are usually paid out of free cash flow (operating cash flow - capital expenditures). If the company had negative or insufficient cash flow, it might have decided to forgo dividends to retain cash for other purposes, such as reinvesting in the business or paying down debt.
3. Assess profitability: Look at the company's profitability indicators, such as net income and earnings per share (EPS). If the company experienced declining or negative profitability during those fiscal years, it might have chosen not to pay dividends to preserve funds and focus on improving financial performance.
4. Consider business strategy: Evaluate the company's overall business strategy and objectives. Gateway, Inc. was a computer hardware company, and at times, technology companies might prefer to reinvest earnings back into the business for research and development, expansion, or acquisitions instead of paying dividends to shareholders.
By analyzing the financial statements, cash flow, profitability, and considering the company's strategic priorities, you can gain a better understanding of why Gateway, Inc. did not declare or pay dividends during that period. It's important to note that companies can have various reasons for not paying dividends, and further research and analysis would be required to have a definitive answer for Gateway, Inc. in this specific case.