Gateway Issues Fourth-Quarter Warning

Disappointing holiday sales result in even greater loss than previously expected.

PC maker Gateway Inc. announced this week that it will post an even greater fourth-quarter loss than previously expected, due in large part to disappointing holiday sales.

Officials with the Poway, Calif., company, which previously had predicted revenues of $1.2 billion, said Tuesday they now expect revenues to come in around $1.06 billion. Gateway will announced quarterly earnings Jan. 29.

While the number of PCs sold during the quarter—about 720,000—was 5 percent more than the previous fourth quarter, that was offset by the money Gateway had to spend in promotions, according to Chairman and CEO Ted Waitt.

"While our quarterly unit volume pace gained velocity at the end of the quarter, the need to invest in spurring that demand through promotions significantly increased margin pressure," Waitt said in a prepare d statement.

Further complicating matters is a dispute with a major unnamed partner that could result in additional financial losses, the company said.

This comes as Gateway broadens its product lines and reorganizes internally. The company has begun selling such items as plasma television sets, and recently named industry veteran Joe Formichelli, a former executive at IBM and Toshiba Corp., as executive vice president of operations.

One of the areas he will be looking at will be Gateways 272 stores around the country, which analysts have said are a financial drain on the company.

Gateway this week also said that David Turner, senior vice president of sales and marketing, will head up the companys business segment, while T. Scott Edwards, formerly with Sony Corp., will be executive vice president of its consumer business.