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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (142350)	1/8/2002 6:47:30 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

POS-2 debt cut to junk? Go MOOOOOOOOdy's!<G> biz.yahoo.com Tuesday January 8, 6:44 pm Eastern Time Gateway cut to junk status by Moody's (UPDATE: Adds Gateway comments, details, byline) By Jonathan Stempel NEW YORK, Jan 8 (Reuters) - Moody's cut Gateway Inc.'s (NYSE:GTW - news) credit ratings to junk status on Tuesday and warned it may cut the ratings again, saying it is concerned about the personal computer maker's ability to maintain or increase revenue and market share. ADVERTISEMENT The downgrade came after San Diego-based Gateway, which focuses on the consumer market, warned late Monday its fourth quarter sales will fall more than 16 percent below expectations and that unit sales fell 15 percent in the quarter. Its shares fell 25 percent Tuesday. Moody's cut Gateway's ``issuer'' and senior unsecured ratings one notch to ``Ba1,'' its highest junk grade, from ``Baa3.'' Downgrades can increase borrowing costs. Gateway said late Monday it has no long-term debt, though Moody's said its ratings cover Gateway's unused $1 billion shelf registration and unused $300 million revolving credit line. Moody's said Gateway, with about $1.1 billion of cash, has ``good near-term liquidity,'' but that its downgrade r Du Du Gateway lost $83 million excluding charges, or 17 cents per share, in its third quarter, the company's third straight quarterly loss. Gateways' rivals include Dell Computer Corp. (NasdaqNM:DELL - news), Compaq Computer Corp. (NYSE:CPQ - news) and Hewlett-Packard Co. (NYSE:HWP - news). The latter two are trying to merge. A Gateway spokeswoman, Ashley Wood, said, ``our first priority is to return to profitability, the first step in our return to long-term sustainable growth. We'll continue to focus on growing profitability, and believe our strategy remains on track.'' The company's shares closed on the New York Stock Exchange at $7.69, down $2.56, after falling as low as $7.45. They have fallen 59 percent in the last year. Moody's issued its downgrade after U.S. markets closed. Gateway shares edged up to $7.73 in after-hours trading. REVENUES FALL SHORT Gateway said Monday it expects to post a fourth-quarter profit, but that revenue in the quarter, typically its best, would total about $1.16 billion, below the $1.39 billion that analysts polled by Thomson Financial/First Call expected. The company also said unit sales would drop 15 percent from the third quarter to 700,000. Gateway had previously forecast an increase. ``Although Gateway is in the early stages of its cost-saving consolidation on the U.S. market, the preannounced results show that Gateway is losing grasp even on its home turf,'' said Credit Suisse First Boston analyst Kevin McCarthy in a research note before the Moody's downgrade. A shrinking personal computer market and big losses among major computer makers have led many analysts to forecast industry consolidation, as companies merge or disappear. Gateway has pursued what some analysts consider a risky strategy of opening a chain of stores it aims to use to increase sales by getting closer to consumers. Some analysts have said the stores are too expensive. Gateway last year announced restructuring plans, including the cutting of 25 percent of staff and the closing of all non-U.S. operations. Last August, rating agency Standard & Poor's cut Gateway's equivalent ratings to ``BB,'' its second highest junk grade, with a negative outlook.