O. T. Computer Maker Gateway Cut To Junk Status By S&P
By Reuters, InformationWeek
Aug 21, 2001 (12:00 AM)
URL: informationweek.com
NEW YORK - Gateway Inc., the No. 4 U.S. maker of personal computers, was cut to junk status on Wednesday by Standard & Poor's, in the latest sign of the struggle for computer makers amid a hotly competitive industry environment and an ailing U.S. economy.
S&P cut San Diego-based Gateway's corporate credit and bank loan rating two notches each to "BB," its second highest junk grade, from "BBB-minus." Its rating outlook is negative.
"The downgrade reflects extremely competitive industry conditions, a declining revenue base, and the company's expectation that it will not return to material profitability until fiscal 2002," the rating agency said. It said Gateway "may be challenged" to restore profitability to expected levels that year.
Gateway last month reported a second quarter pretax loss of about $9 million, or 2 cents a share, and said it saw no imminent rebound for the U.S. consumer PC market. Earlier this month it said it plans to shut operations in Britain and Ireland, eliminating more than 1,000 jobs.
Shares of Gateway closed Wednesday on the New York Stock Exchange at $9.79, down 21 cents. They have fallen 84 percent in the last year. S&P issued its release after U.S. markets closed. |
