Gateway, one of the PC companies hardest hit by the slowdown in the sector, on Thursday reported third quarter revenue of $1.4 billion and a net loss of $520 million, a figure that includes special charges.
Nevertheless, the company said it still expects to return to profitability in the fourth quarter of 2001 “on a pre-tax income basis, excluding special charges.” The last quarter of the calendar is usually the strongest for consumer PC sales because of holiday purchases, and industry analysts expect to see a slight uptick in the fourth quarter because of Windows XP.
“The fourth quarter is when we start to deliver improved results, with compelling solutions and innovative services that will change the way people think about and buy technology,” said Ted Waitt, Gateways founder and CEO.
The company took special charges of $571 million for the quarter for — among other things — its previously planned closure of international operations, the closure of some call centers and manufacturing operations, and loss in value of several of its investments. Excluding those special charges, Gateway reported a pre-tax loss of $83 million, which was in line with its revised estimates.
Like many other technology companies, Gateway said there was a drop in demand from all of its customer segments following the Sept. 11 terrorism attacks. In addition, it said it had a larger-than-expected operating loss associated with closing much of its international operations.
Gateway actually saw greater unit volume for the quarter than it did the previous one. PC sales in the U.S. increased to 818,000, compared with 798,000 for the second quarter of 2001. Gateways average selling price — the sum of PC and non-PC products and services sold at the point of sale — was $1,460 for the quarter, compared with $1,501 in the second quarter.
Meanwhile, the companys gross margin for the quarter, excluding special charges, was 16.8 percent, compared to 18.7 percent in the previous quarter.