Gateway is going to go up today. -g-
biz.yahoo.com
Thursday January 6, 8:42 am Eastern Time
RESEARCH ALERT - Gateway buys maintained
CHICAGO, Jan 6 (Reuters) - ABN AMRO said Thursday it was maintaining its buy rating on personal computer maker Gateway Inc. despite the company's warning that fourth quarter earnings and revenues would be below expectations.
-- Meanwhile, Credit Suisse First Boston analyst Michael Kwatinetz in New York lowered his earnings and revenue outlook for Gateway, but left unchanged his buy recommendation.
-- On Wednesday, Gateway projected fourth quarter revenues of about $2.45 billion and earnings per share of about 37 cents after adjusting for a previously announced charge. The earnings per share forecast was 7 cents below the analysts' consensus.
-- ABN AMRO analyst Jonathan Ross said he had expected revenues of $2.8 billion, but said the company ''indicated better-than-expected margins and guided for unusually strong seasonality in the first quarter with revenues and EPS flat relative to the fourth quarter and continued margin improvement,'' Ross said in a research note.
-- ''Despite some misgivings over the company's explanation for fourth quarter shortfall, we are not cutting our first quarter earnings forecast, and are maintaining our full-year 2000 forecast,'' Ross said. ''Stronger-than-expected progress in the Internet business leaves some room for an upside surprise; we are therefore retaining our buy recommendation.''
-- Ross pegged first quarter 2000 earnings at 41 cents per share, and full-year EPS at $1.79.
-- Ross said the company ended 1999 with more than one million Internet subscribers, compared with more than 600,000 at the end of the third quarter. ''This implies an improving attach rate which beat our expectations,'' he said. ''We believe strength on the Internet side could lead to an upside surprise later in 2000 even if near-term performance remains under pressure,'' Ross said.
-- Kwatinetz cut the fourth quarter operating EPS estimate to $0.42 from $0.49. He left unchanged his 2000 EPS projection unchanged at $1.80.
-- Kwatinetz lowered the Q4 revenue forecast by $240 million to $2.45 billion, and increased the estimated Q4 gross margin forecast to 22.3 percent from 21.8 percent.
-- Kwatinetz ''re-emphasized'' his ''buy rating, once the stock settles.''
-- Gateway shares closed Wednesday at 62-4/16. |
