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Gateway Earns Beat Expectations

July 14, 2000

SAN DIEGO (AP) _ Shares of computer Gateway Inc. fell 2 percent in morning trading on the New York Stock Exchange despite beating analysts’ estimates for its second-quarter earnings.

For the quarter ending June 30, Gateway had profits of $121.6 million, or 37 cents per share. That was up 36 percent from $89.2 million, or 28 cents per share, for the same period last year.

Gatweay cited strong personal computer sales and an increase in sales of PC-related products and services.

The results, released after the market closed Wednesday, beat analysts’ forecasts of 36 cents a share, as reported by First Call/Thomson Financial. Still, shares of Gateway fell $1.50 to $67.625 in early trading Thursday.

Gateway’s senior vice president and chief financial officer John Todd said 40 percent of the company’s profit was from non-PC income, with half of that repeat business.

In terms of sales, San Diego-based Gateway reported $2.14 billion, up 12 percent from $1.9 billion a year ago.

For the six months ending June 30, Gateway showed profits of $257.7 million, or 78 cents per share, up 36 percent from $188.8 million, or 59 cents per share, for the same period last year.

Still, Gateway’s sales to businesses declined 10 percent in the second quarter compared with last year. Business-to-business performance showed improvement over the previous quarter’s 19 percent decline, and the company was expecting flat growth in the third quarter and positive growth in the last quarter.

``We’re still not living up to the potential of our brand and our unique market position in the business-to-business-arena, but we’re moving in the right direction,″ said Jeff Weitzen, Gateway’s president and CEO.

Gateway shipped 1.2 million units in the second quarter compared with 1 million units a year ago, a 17 percent increase.

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On the Net: http://www.gateway.com

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