More nice comments from Gateway:
<"In terms of the fourth quarter, let me say that it's an understatement when I tell you that we're all intensely frustrated by the supply situation we found ourselves put in," said Jeff Weitzen, Gateway's president and chief executive. "But let me say that we are not about to stand by and let the actions of others dictate what products Gateway customers can buy.
"In the next week or so you're going to hear about aggressive and definitive steps we're taking to make sure this does not occur again," he added.
John Todd, Gateway's senior vice president and chief financial officer, said supplies of 450-MHz Pentium III and 400-MHz Celeron processors, which drive PCs in the $999 to $1,299 "sweet spot" segment that made up 55% of Gateway's third-quarter business, were woefully inadequate. The shortage forced Gateway to constantly adjust its advertising message, and unit sales in that pricing range are now expected to drop to about 40%, according to the company.
"In the simplest terms, we didn't know what processors we were going to get in the next couple of days," Todd said.
A source at another OEM confirmed the supply issue, noting that Intel had been persuaded to sell the company 500-MHz Pentium IIIs at 450-MHz prices to keep production lines moving.
Representatives from Intel, Santa Clara, Calif., were unavailable for comment.
Gateway, which is almost exclusively dependent on Intel for motherboards as well as processors, said it was Intel's aggressive pricing throughout 1999 that persuaded it to essentially drop AMD from its lineup. The company said it's logistically easier to use a single supplier-but only if it the parts are delivered.
"The Intel issue never got materially better," Todd said during the conference call. "There was spotty performance. As recently as last week we had a 450-MHz [supply] problem. There was no consistency to deliveries, and we just ran out of time."
Weitzen said delays to the Intel 820 chipset forced Gateway to become an exclusive supplier of older Intel 440BX-based systems. "But we're taking steps to ensure that whether a supplier has problems or not doesn't ultimately affect how we appear in the marketplace and we don't end up in this situation again," he said.>
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