Kemble,
GTW
.......labored under particularly stiff competition from rival Dell Computer Corp. (DELL.O) and, to a lesser extent, from Hewlett-Packard Co. (HPQ.N).
Gateway Posts Loss, Gets SEC Notice
POWAY, Calif. (Reuters) - Gateway Inc. (GTW.N) on Wednesday reported its eighth quarterly loss in nine quarters as the No. 3 U.S. personal-computer maker reeled from stiff competition, a weak economy and slack technology demand.
Gateway, based in Poway, California, reported a fourth-quarter loss of $72 million, or 22 cents a share, compared with year-ago net income of $9.4 million, or 3 cents a share. Revenue fell to $1.06 billion from $1.14 billion.
Gateway said its quarterly results include a 3-cent-a-share
loss resulting from a previously disclosed dispute with a major partner, AOL Time Warner Inc. (AOL.N).
Analysts had forecast a loss of 19 cents a share on revenue of $1.06 billion, according to tracking firm Multex.
Gateway also said it had received a "Wells Notice" from the Securities and Exchange Commission relating to its previously disclosed SEC investigation, which Gateway believes relates to matters from fiscal 2000.
A Wells notice gives the target some time to mount a defense against a potential action from the SEC.
"The company intends to respond promptly and is fully cooperating with the SEC to resolve this matter," Gateway said in a statement.
Gateway said during the fourth quarter AOL unilaterally recomputed payments it had made in 2001 and the first half of 2002 and withheld the claimed overpayments from amounts currently owed to Gateway. The company disputes AOL's retroactive adjustment.
Because of the uncertainty over the company's ultimate ability to collect the withheld amounts, however, Gateway has reduced 2002 revenues and earnings by the amount of the adjustments. If AOL's adjustments turn out to be appropriate, Gateway also anticipates a reduction of about $3 million to $5 million in future quarterly revenues and earnings relating to AOL subscribers generated by Gateway.
Earlier this month, Gateway warned of a deeper loss than previously expected, citing disappointing holiday spending and aggressive sales promotions that crimped margins. It has labored under particularly stiff competition from rival Dell Computer Corp. (DELL.O) and, to a lesser extent, from Hewlett-Packard Co. (HPQ.N).
Gateway's Chief Financial Officer Rod Sherwood said in an interview that he would not be giving specific revenue and results-per-share guidance for the first quarter.
"It just reflects the uncertain economy and we think that's a prudent approach," Sherwood said, adding that he would be issuing a forecast for gross margin and sales, general and administrative expenses on the conference call.
During the fourth quarter, PC unit sales fell slightly to 720,000 from those in the third quarter and rose 6 percent from the year-ago fourth quarter, Gateway said.
Typically, PC sales rise in the fourth quarter from the third, but Gateway was particularly hard hit this year.
Gateway said that its average PC unit price fell to $1,467 in the fourth quarter from $1,533 in the third quarter, a result of aggressive pricing, a higher mix of lower-cost PC systems, and seasonal promotions during the holiday-sales-driven fourth quarter.
For 2003, the company said it expects cash and marketable securities to remain at more than $1 billion, including an anticipated tax refund expected in early 2003. Gateway said it also anticipates an effective tax rate of zero percent, which will result in pretax losses being equal to net losses in 2003.
Shares of Gateway fell 18 cents, or 5.8 percent, to $2.92 on the New York Stock Exchange. Results were released after the close of regular U.S. trading. |
