Gateway Posts Larger Than Expected Loss

For Q2, the company reported a net loss of $61 million, or 19 cents a share, on revenue of $1 billion.

Direct PC marketer Gateway Inc. reported a larger loss than expected as the company continues to stumble amid an industry-wide downturn in demand and a loss of market share to larger rival Dell Computer Corp.

For the second quarter, the company reported a net loss of $61 million, or 19 cents a share, on revenue of $1 billion, down from $1.5 billion it garnered a year ago. Wall Street analyst had been forecasting a loss of 17 cents a share on revenue of $987.8 million, according to Thomson Financial/First Call.

Since the fourth quarter of 2000, when sales of consumer PCs fell off dramatically signaling the beginning of an industry-wide recession, Gateway has posted only one profitable quarter. Since early 2001, the company has slashed its work force, closed overseas operations and shut down more than two-dozen Gateway Country store retail outlets.

Company founder and Chairman Ted Waitt said the computer makers increase in sales from the first quarter indicates that the companys refreshment of its product line and new sales initiatives are fueling a turnaround.

"Gateway is growing again. The introduction of our new notebook and desktop PC designs, combined with our value pricing strategy, enabled Gateway to make significant progress against our plan to return to sustained profitability," Waitt said in a statement issued with the earnings release.

During the quarter, Gateway, headquartered in Poway, Calif., sold 651,000 PCs, a slight increase from the previous quarter, but still 18 percent below the number of units it shipped during the same period a year ago.

Looking ahead, Gateway said it expects to post slightly smaller loss for the third quarter and reiterated reiterate its earlier of 2002 revenues projections of $4.5 billion to $5 billion.