7/13 GTW Posts Earnings Just Above Consensus
By Michael Fitzpatrick
LOS ANGELES (Reuters) - Computer maker Gateway Inc.(NYSE:GTW - news) on Thursday posted earnings a penny above Wall Street expectations and cited strong sales of personal computers, PC-related products and services.
The San Diego-based company, the No. 2 U.S. direct seller of computers, posted earnings of $122 million, or 37 cents a share, vs. $89.2 million, or 28 cents a share a year earlier. The Wall Street consensus was for earnings of 36 cents a share, according to First Call/Thomson Financial, which compiles analysts' estimates.
Revenues rose to $2.14 billion from $1.91 billion. Gross margins were a record 23.3 percent of sales, an increase of 1.30 percentage points over last year, Gateway said.
``For the second time in two quarters, we have grown net income at triple the rate of our revenue growth, meaning we're getting the lion's share of profitable PC sales,'' Jeff Weitzen, Gateway chief executive officer, said in a statement.
Gateway is comfortable with the Wall Street consensus for per share earnings of 45 cents in the current third quarter, Chief Financial Officer John Todd said.
``We're saying we're comfortable with consensus estimates,'' Todd said in an interview.
Todd also said the company had met its full-year target of deriving 40 percent of overall income from non-PC sales, in its so-called beyond-the-box strategy, and that the company was now raising that target to 45 percent.
``We've reached our full-year target in the second quarter, and we're going to continue to grow from there,'' Todd told Reuters. ``We need to accelerate the beyond-the-box growth.''
Gateway stock, which rose 1/16 to 71 in trading on the New York Stock Exchange before the earnings were released, traded down to 70-3/4 in after-hours activity on Instinet.
Gateway said sales at three of its four business units had shown growth above 20 percent, while sales to business fell 10 percent.
``We continue to have strong momentum internationally,'' Todd said, adding, ``Our consumer business was up 32 percent. They were partially offset with continued softness in our business sector, which we think we have a pretty decent plan to fix.
Gateway's sales to businesses fell 10 percent in the second quarter from a year earlier as the company continued to refocus its efforts on sales to small and medium-sized businesses and government and educational institutions. Gateway said it was targeting flat growth in the third quarter and positive growth in the fourth in the sector.
``We're still not living up to the potential of our brand and our unique market position in the business-to-business-arena, but we're moving in the right direction,'' Weitzen said. |
