Gateway Falls on Weak Q4

The San Diego, California-based computer maker said results were worse than its already lowered expectations "due to a continued deterioration of worldwide PC demand and increasing pricing pressure, both of which are expected to continue at least through the first half of this year."

The company said it lost $94.3 million, or 29 cents per share, during the quarter, including a $187 million pre-tax charge for the write down of technology investments and other assets, compared with a profit of $126 million, or 38 cents per share, a year earlier. Revenue totaled $2.37 billion, down from $2.55 billion.

"While Gateway's 2000 results were not as we had hoped, our core strategy of being a trusted guide for technology and of providing products and services in addition to the PC -- our 'beyond-the-box' initiative -- is the right strategy, and we will continue to execute against it," said president and chief executive officer Jeff Weitzen.

Sales of non-PC products and services accounted for 24 percent of revenue and 100 percent of operating income, the company said.

Slow PC sales have led to a glut in inventories across the market, resulting in "an aggressive pricing environment that will have negative consequences for the PC sector for the next six months," said Weitzen.

In addition to focusing on its non-PC businesses, Gateway said it will cut selling, general and administrative expenses, streamline its manufacturing process and consolidate its vendors.

For the full year, the company posted a profit of $315.9 million on revenue of $9.7 billion, or 95 cents per share, 28 percent below the prior year. Excluding the charge, net income rose 3 percent from 1999.

For 2001, Gateway said it expects revenue growth of just 3 percent and operating earnings growth of 6 percent, "reflecting the expected continuation of the present economic environment through the first half and an expectation of improvement in the second half of the year."