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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Paul V. who wrote (45632)	4/20/2001 12:48:30 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

Gateway reports 1st loss in 4 years By Janet Haney, CBS.MarketWatch.com Last Update: 9:51 PM ET Apr 19, 2001 SAN DIEGO (CBS.MW) -- Gateway reported its first loss in almost four years Thursday, as its U.S. consumer sales fell 19 percent and total sales slid 15 percent. FRONT PAGE NEWS Microsoft tops earnings, revenue estimates Quarterly reports grab buyer's attention Nasdaq soars; Dow also flourishes Top 10 reasons the bear market is over Gateway (GTW: news, msgs, alerts) initially said its first-quarter pre-tax loss was approximately $6 million, or break-even. Later on, the San Diego PC maker said it lost 1 cent, which matches the consensus estimate from analysts surveyed by First Call/Thomson Financial. Last year, the company reported earnings of $119.6 million, or 41 cents a share. After the numbers were released, First Call said it tagged a rough estimate of a loss of $81 million, or 17 cents a share for Gateway's first quarter. First Call pointed out that a final per-share-loss number may not be available until Friday morning, after its gathers information from analysts. At issue are a slew of special charges Gateway incurred in the quarter. Including pre-tax effects of $533 million in special charges, Gateway lost $503 million, or $1.56 a share. Gateway hasn't reported a loss since the third quarter of 1997. The company said Thursday that it expects to break even during the second quarter. Sales in the quarter were $2 billion, matching Wall Street's expectation. That compares to year-ago revenue of $2.4 billion. Ahead of the news, Gateway stock added 72 cents to $18.02. Chief Financial Officer Joe Burke called this year, "largely a restructuring year" for Gateway and said there are "opportunities for us to spend more wisely." This marks Burke's first quarter as the top number cruncher at Gateway. In late January, Gateway co-founder Ted Waitt took back the reins as CEO of the company and Burke took over the position as CFO, succeeding John Todd. "We think there are opportunities for us to grow and if the market continues grows as well, we have a lot of exposure to the U.S. consumer marketplace and if things get rosy there from the perspective, of tax cuts and further interest rate reductions that's not necessarily a bad thing for us," the CFO said in an interview with CBS.MarketWatch.com. Breakin' it down "In order to get our business in fighting form for the second half of 2001, we're moving with speed and aggressiveness to make the appropriate operational improvements to our business now," Waitt, commented in a statement. Gross margins in the quarter were 9.7 percent, excluding special charges the gross margins would have been 18.5 percent, vs. 21.6 percent last year. Gateway said it sold 1.1 million units worldwide in the first quarter, a decrease of 12 percent year-over-year. Additionally, Gateway's U.S. consumer unit sales dropped 19 percent from last year, yet its U.S. business unit revenue was up 6 percent. The company pointed out that it had a 13 percent jump in sales to small and medium businesses vs. the prior year. For its international businesses, its European operations saw a 38 percent decline in sales, and its Asia-Pacific region lost 32 percent. Moreover, Gateway said that within the last 6 weeks, it has taken steps to "price more competitively." Its beyond-the-box sales made up 23 percent of total revenue. Meanwhile, unit sales are expected to be up for the second half of the year, compared with last year and Gateway predicts it will return to profitability. "Our goal is to be growing at a level of unit sales in 2002, at hopefully targeting twice the market rate of growth for unit sales and . . . we're targeting our cost structures to be inline to deliver operating income of around 7 percent before tax, [that would] get us to an after-tax rate of about 5 percent," Burke said. Gateway warned in late February that it would take a charge between $150 million to $275 million, but that it expected to break even in the first quarter of 2001. Janet Haney is a reporter for CBS.MarketWatch.com in San Francisco.