Gateway Posts Loss, Sees Momentum
Thursday April 18, 8:51 pm Eastern Time
By Derek Caney
biz.yahoo.com
NEW YORK (Reuters) - No. 4 U.S. personal computer maker Gateway Inc. (NYSE:GTW - news) reported on Thursday a loss and shrinking revenue in the first quarter, as the company retrenched against a backdrop of weak demand and stiff competition.
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The Poway, California-based company said however it expected to buck the industry trend by maintaining flat revenue in the second quarter, when the sector typically declines.
But some analysts expressed skepticism about its strategy of aggressive price cuts to drive volume growth and eventually, profit margin.
``Their pricing strategy is driving more traffic,'' said A.G. Edwards analyst Brett Miller. ``The question is at what price and how long can you continue to do this? Is this a good long term strategy?''
Gateway reported a net loss of $123 million, or 39 cents per share, compared with a loss of $502.9 million, or $1.56 per share, a year earlier, when the company began a restructuring that eventually included closing foreign operations and downsizing in the United States.
Excluding $99 million in charges for restructuring and store closings, Gateway reported a loss of $61 million, or 20 cents per share, which compared with its Feb. 27 warning that it would lose 18 cents to 24 cents per share on $1 billion in revenue.
Research firm Thomson Financial/First Call said that ahead of the Thursday report analysts had expected on average a 20-cent per share loss on sales of $977 million. |
