- Company expects lower revenue and EPS due to significantly
slower-than-expected consumer PC demand
- Management reduces 2001 estimates
- Company announces $200 million charge
SAN DIEGO, Nov. 29 /PRNewswire/ -- As a result of considerably
weaker-than-expected consumer holiday sales of personal computers, Gateway,
Inc. (NYSE: GTW) today announced that it expects to report revenue and
earnings per share for the fourth quarter ending December 31 that are
significantly lower than Wall Street consensus estimates.
The company said it expects to report revenue of approximately
$2.55 billion for the fourth quarter, about equal to the same period the
previous year, and $500 million below previous estimates. The company said it
expects operating income of at least $0.37 per share, which is $0.25 below
analyst consensus estimates.
Gateway also will be taking a one-time charge of approximately
$200 million, or $0.39 per share, related primarily to the write-down of the
company's investments in technology-based companies and other assets in
accordance with generally accepted accounting principles. Including the
charge to earnings, Gateway could report a loss of $0.02 for the fourth
quarter assuming there is no upside to the adjusted earnings guidance.
In addition, the company said today that it is guiding EPS estimates lower
for 2001. The company now expects EPS of $1.89 for the full year 2001,
versus previous consensus estimates of $2.28.
"We expect consumer sales to continue ramping up this quarter, but it is
now obvious to us following the Thanksgiving weekend that they will not grow
sufficiently to allow us to meet previous consensus for EPS and guidance for
revenue," said John Todd, Gateway chief financial officer. "The economic
slowdown, coupled with on-going shifts in PC seasonality, clearly had a
significant impact on our sales over the holiday weekend. We expect these
issues will continue to have an effect on overall demand over the next twelve
to eighteen months."
"While our current quarter results are disappointing, we still expect to
deliver 25 percent net income growth this year prior to the writeoff, which
will be among the best in the industry," said Jeff Weitzen, Gateway president
and chief executive officer. "We also believe we have the right strategy, and
are executing well against it. We remain confident that we're on the right
track and that we will continue to distance ourselves from traditional
competitors in 2001. We also believe we are well positioned to benefit from
the coming convergence of broadband access, content, communication and
devices."
About Gateway
Gateway (NYSE: GTW), a Fortune 250 company founded in 1985, focuses on
building lifelong relationships with consumers and businesses through complete
technology personalization. Gateway ranked number one in U.S. consumer PC
revenue in 1999(1) and was rated among the top ten best corporate reputations
in America according to a survey conducted in August of 1999 by Harris
Interactive and the Reputation Institute and published in The Wall Street
Journal. In 1999, Gateway was seventh in total return to shareholders among
Fortune 500 companies and tenth in total shareholder returns over the past
five years.(2) Gateway employees worldwide provide clients with services and
built-to-order computers that consistently win top awards from leading
industry publications. Gateway had total global revenue of $8.65 billion in
1999. For more information, visit our Web site at http://www.gateway.com
(1) According to GartnerGroup/Dataquest US PC Quarterly statistics.
(2) According to Fortune Magazine, April 17, 2000.
Special Note
The above statements include forward-looking statements based on current
management expectations. Factors that could cause future results to differ
from these expectations include the following: general economic conditions;
growth in the personal computer industry; competitive factors and pricing
pressures; component supply shortages; short product cycles; foreign currency
fluctuations; risks relating to new or acquired businesses and joint ventures;
risks of financing customer orders; infrastructure requirements; risks of
equity investments; changes in product, customer or geographic sales mix;
access to technology; and inventory risks due to shifts in market demand.
Additional factors are described in the Company's reports and other filings
filed with the Securities and Exchange Commission.
SOURCE Gateway, Inc.
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Related links:
http://www.gateway.com
CONTACT:
Media, John W. Spelich, Public Relations,
858-799-2657, john.spelich@gateway.com; or Investor Relations,
Marlys D. Johnson, Investor Relations, 605-232-2709,
marlys.johnson@gateway.com, both of Gateway, Inc.
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