With just one weekend of holiday sales in the bag, stock shoppers are snapping up

Gateway

(GTW)

.

Investors applauded Gateway for its consumer focus, strength at the low end and its on-floor sales force capable of increasing sales per customer. The consumer computer retailer surged 11.2% in trading Wednesday to $9.25, with volume more than three times its average. By contrast, boxmaking rival

Compaq

(CPQ)

dropped 4.8%, and competitor

Dell

(DELL) - Get Report

was off 1.9%.

Analysts mulled the results of the Thanksgiving weekend and rejoiced that PC sales held up despite the lagging economy. PC followers were braced for a double-digit year-over-year decline this fourth quarter compared with last year's depressed final quarter. But initial results show that PC unit sales were steady with last year in the crucial shopping weekend. Lower price points for those computers should keep the revenue total for the period down, despite a resurgence in customer enthusiasm.

Gartner analyst Martin Reynolds says it's too early to tell if the holiday season will be a success, but he adds that it wouldn't take much for a good comparison "because Q4 2000 was so very ugly." Reynolds explains that a great quarter would feature growth over 2000 of any kind, and a terrible quarter would have double-digit declines in units sold. "At the moment I'm still inclined to say it's not so good," he says. Computer sellers have little margin left to cut out of PC prices, and there are no more free Internet access offers in the postbubble spending meltdown.

Undaunted, Prudential analyst Kimberly Alexy reported an "extremely busy Thanksgiving" for Gateway stores with "sales relatively flat year over year," in a note to clients, highlighting Gateway's free shipping promotion and in-store $100 rebates. Alexy rates Gateway market outperform, and Prudential has no banking relationship with the company.

Lehman Brothers' Dan Niles argued that with such low expectations this holiday season, he believes Gateway and Compaq would not disappoint his estimates for the fourth quarter. Niles rates Gateway a market perform, and Lehman has no banking relationship with the company. Likewise, A.G. Edwards analyst Brett Miller forecasts "respectable" unit sales volumes this holiday season for the PC sector but lower total revenues on those cheaply priced machines. He adds that

Apple

(AAPL) - Get Report

and Gateway will have the highest average sales prices due to more appealing presentation of their products in stores. Miller rates Gateway a hold. His company has no banking relationship with Gateway.

Gateway has pledged to be profitable in the fourth quarter, despite a loss of 17 cents a share in the third quarter, excluding almost $500 million in charges taken for staff and facilities cuts. Analysts forecast a penny-a-share loss on $1.38 billion in revenue in the fourth quarter, according to Multex.com consensus estimates. Gateway turned in $1.4 billion in third-quarter revenue.

Last year the computer retailer turned an 8-cent profit on $1.59 billion in revenue in its fourth quarter. The slimmer profit outlook for this quarter can be attributed to a declining average selling price in PCs, a trend confirmed by analysts' holiday checks. Typically, economically constrained shoppers are gravitating toward cheaper computer setups.

Gateway has been troubled throughout the year by a management shakeup and several efforts to reorganize the company, including the most recent reorganization announced Aug. 28. The new Gateway would focus more on services and other "beyond the box" revenue streams, would eliminate 25% of international employees and 15% of domestic employees, and could include an exit from European efforts.