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Gateway Flubs Q4

Gateway Flubs Q4

Gateway warned investors Monday that fourth-quarter revenues fall short of projections. It now anticipates doing about $880 million instead of $925 million-$975 million.

Gateway expects to post an operating loss, excluding restructuring costs, of between 9 cents-15 cents a share. It thinks now it'll be in the low end of that range.

Gateway blamed shortages of 610 Media Center PC, its FMC-901 Family Room Media Center PC and HDTV models as well as the ever-continuing PC price war for its troubles.

After taking a beating on PCs from Dell and HP, Gateway is seeking to establish its credentials in consumer electronics up against established giants like Sony and Panasonic.

The company claimed sales of new higher-margin consumer electronics widgetry such as digital TVs and digital cameras were strong over the holidays. Digital TV revenues were supposedly up 20%.

Gateway expects consumer electronics revenues as a percentage of total revenue will rise significantly on a sequential basis and that total gross margin percentage, including PC margins will improve sequentially. In Q3, its consumer electronics/non-PC revenue as a percent of total revenue stood at 28% or $251 million.

Q4 sales to professional segments including small- and medium-sized businesses, government agencies, educational institutions and enterprise accounts were reportedly in line with internal expectations.

Q4 restructuring costs are now projected at between $42 million-$45 million compared to the original projection of $50 million - $60 million.

Gateway said it exited the year with over a billion dollars in the bank.

Investors punished Gateway shares sending them tumbling 12.9% on Tuesday to $4.34. Bear Stearns downgraded the stock citing concerns about Gateway's ability to execute a multi-part turnaround.

"The challenge for Gateway's model of building PCs and diversifying into a consumer electronics retailer is that the company has to be good at many things and deliver ahead of plan," wrote Bear Stearns analyst Andrew Neff.

Gateway plans to provide details of its Q4 performance when it releases the full results on January 29.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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