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POWAY, Calif. - Ted Waitt had his eureka moment over a baccarat table two years ago at Comdex, the technology trade show in Las Vegas. His computer company, Gateway Inc., was hemorrhaging money and becoming an also-ran against Dell Inc. and Hewlett-Packard Co.
Waitt and a longtime supplier began talking about the flat-panel TVs that were turning up in high-end consumer electronics showrooms. They were sleek enough to hang on living-room walls like paintings and offered sharper images than standard tube TVs. But with prices starting around $5,000, few people could afford them.
"Wait a minute, this is a no-brainer," said Waitt, Gateway's chairman and chief executive officer. What if he could sell the TVs at more-competitive prices and still make a profit?
And so he did.
In the past year alone, Gateway has become a serious player in flat-panel TVs and entered hot categories like digital cameras, camcorders and music players. Its...