Gateway, the computer manufacturer, was a fast-growing company during the 1990s, with continual revenue and earnings growth, bringing admiration from analysts. However, in 2000 revenue growth slowed, from $8,965 million in 1999 to only $9,601 million, despite the opening of over 800 new retail outlets. Operating income was down, at $231 million (after tax) compared with $403 million in 1999. The firm trumpeted its retail expansion, which pleased analysts, and the stock remained around $60. However, in 2001, a torpedo struck: The firm took a restructuring charge of $876 million and reported an after-tax operating loss of 5983 million. The stock dropped to $20.

Below are some numbers reported in Gateway's 2000 l0-K filing. Go through these numbers and develop diagnostics that point to a quality of earnings issue that might-forecast that earnings in 2001 would bedegraded.

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2000 1999 (in thousands) Accounts receivable, net: Accounts receivable Alowance for uncoectibie accoun's 557,479 (12,724) 544755 662811 -(16,472) 546,339 Inventory Components and subassemblies Finished goods 252,085 S 183,321 8349 15,06 191,870 ,092,004 62,984 Property. plant, and equipment 3,308,696 41282 346 Accumulated depreciation and amortization 87445745660 745,660 Other assets: 295,812 212,865 Financing receivables, net of alowance for losses Long-term investments Deferred icome taxes Other S 701,659 339,143 290,596 283,924 211,92 261,548 982146 Accrued liabilities: Waranty Other 127,770 428,553 556,323 142,729 465,403 509,132 Other current labiities: Deferred revenue Other $ 116,089 34,831 108,603 39,699 150920 148,302 Other long-term labilities Deferred revenue Warranty Other 62,673 54,910 23,588 141,171 61,200 7,246 19,414 27,860 681.000 Total net operating assets $1,767,000