Company Expects to Return to Profitability and Exceed Analysts' EPS Consensus
Shipped Approximately 700,000 Units
Exits Quarter with $1.1 Billion in Cash and Zero Long Term Debt
POWAY, Calif., Jan. 7 /PRNewswire/ -- Based on preliminary results from
the fourth quarter of 2001, Gateway, Inc. (NYSE: GTW) today reaffirmed
previous guidance that it expects to return to profitability for the quarter
on a pre-tax income basis, excluding special charges. Consensus estimate for
the fourth quarter is a loss of $.01 per share. The company also said it
experienced a 15% sequential decline in domestic unit sales from the third to
fourth quarters.
The company expects to report revenue of approximately $1.16 billion for
the quarter when it announces its fourth quarter and full year 2001 results on
its regular conference call on January 24, 2002. At that time, Gateway will
provide shareholders with finalized results for the quarter, including greater
detail of its results of operations, as well as guidance for 2002.
The company said today that it generated a higher than expected average
unit price of approximately $1,660 in the fourth quarter based on a
combination of the continued development of the company's technology solutions
business as well as a richer system mix in PC sales. This, coupled with
aggressive cost containment efforts, contributed to the company's expected
return to profitability.
"Our fourth quarter performance shows we're making solid progress on our
strategy of delivering integrated technology solutions," said Ted Waitt,
Chairman and CEO. "It's clear that a significant portion of market demand was
at the very low end of the PC market in the fourth quarter, driven largely by
aggressive pricing and promotions. We stayed focused on our strategy and
targeted higher-end customers during the holiday selling season, which allowed
us to meet our previous guidance of returning to profitability, our primary
goal.
"Going forward, we intend to continue to focus on cost containment and
efficiency while advancing our strategy through strong execution and
profitable growth among our target markets."
Finally, Gateway expects to report continued strength in liquidity,
exiting the fourth quarter with no long term debt and more than $1.1 billion
in cash and marketable securities, up from $936 million at the end of the
third quarter.
About Gateway
Gateway (NYSE: GTW), a personal technology company, improves people's
lives through a combination of the latest and best hardware, communication
tools, applications, training and service, all wrapped in a custom financing
package. The company takes a localized approach, utilizing its Web site, call
centers and nationwide network of Gateway retail stores to build direct
relationships with consumers, small and medium businesses and government and
education institutions. A Fortune 500(R) company founded in 1985, Gateway is
ranked as the most admired American company in the Computers and Office
Equipment industry in a Fortune magazine survey (1) and is the top brand in
customer loyalty and for first-time home computer purchases of Wintel-based
PCs(2). For more information, visit Gateway's Web site at http://www.gateway.com.
Special Note
This press release contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they do not materialize or
prove incorrect, could cause Gateway's results to differ materially from those
expressed or implied by such forward-looking statements. All statements, other
than statements of historical fact, are statements that could be deemed
forward-looking statements, including any projections or preliminary estimates
of earnings, revenues, or other financial items; any statements of plans,
strategies and objectives of management for future operations; any statements
regarding proposed new products, services or developments; any statements
regarding future economic conditions or performance; statements of belief and
any statement of assumptions underlying any of the foregoing. The risks that
contribute to the uncertain nature of these statements include, among others,
competitive factors and pricing pressures, including the impact of aggressive
pricing cuts by larger competitors; general conditions in the personal
computing industry, including changes in overall demand and average selling
prices, shifts from desktops to mobile computing products and information
appliances and the impact of new microprocessors and operating software; the
ability to transform the company to a technology solutions provider and
restructure its operations and cost structure; component supply shortages;
short product cycles; the ability to access new technology; infrastructure
requirements; risks of international business; foreign currency fluctuations;
ability to grow in e-commerce; risks of minority equity investments; risks
relating to new or acquired businesses, joint ventures and strategic
alliances; risks related to financing customer orders; changes in accounting
rules, the impact of litigation and government regulation generally; inventory
risks due to shifts in market demand; changes in product, customer or
geographic sales mix; the impact of employee reductions and management changes
and additions; and general economic conditions, and other risks described from
time to time in Gateway's Securities and Exchange Commission periodic reports
and filings. The Company assumes no obligation to update these forward-looking
statements to reflect events that occur or circumstances that exist after the
date on which they were made.
(1) Fortune Magazine, "America's Most Admired Companies," February 19,
2001.
(2) From the Harris Interactive Consumer TechPoll(SM) study of 140,000 PC
owners who use the Internet, released March 5, 2001.
SOURCE Gateway, Inc.
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Related links:
http://www.gateway.com
CONTACT:
Media, Donna Kather, +1-858-848-2657,
donna.kather@gateway.com, or Ashley Wood, +1-858-848-3874,
ashley.wood@gateway.com, or Investor Relations, Marlys Johnson,
+1-605-232-2709, marlys.johnson@gateway.com, all of Gateway, Inc.
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