Gateway's 4Q Forecast: Revenue To Be Short, Earnings At Guidance Low End

The Poway, Calif.-based company, which previously expected revenue for the quarter to total $925 million to $975 million, now expects that figure to be around $880 million, company officials said.

The loss for the quarter was previously estimated at between 9 cents and 15 cents per share but is now expected to be closer to 15 cents per share, a company spokesperson said.

The spokesperson said two main factors hurt revenue during the quarter: a constraint in supply of high-demand products such as HDTVs and Media Center PCs, and intense pricing competition in the low-end notebook and desktop PC space.

However, said the spokesperson, Gateway's consumer electronics business, including consumer electronics products aimed at business and home users, is stronger than it has ever been.

For instance, fourth-quarter sales revenue for digital televisions grew 20 percent over those for the third quarter, and the number of units shipped in December doubled that of any previous month, the spokesperson said. Digital camera sales doubled in the fourth quarter compared with the third quarter, said the spokesperson.

Gateway had also been expecting to cut the cost of goods sold in 2003 by $200 million over 2002. However, thanks to a restructuring of its fulfillment model and the way it partners in terms of manufacturing, sourcing, logistics and shipping, the company actually should see a savings of $265 million, the spokesperson said.

Information about how the company's channels fared in the fourth quarter of 2003 is expected to be available when official results for the quarter are released late this month, said the spokesperson.

In a prepared statement, Ted Waitt, Gateway chairman and CEO, said, "We're pleased with the progress we're making in driving improvements in our business each quarter. Our branded integrator strategy is working and in 2004, we intend to continue leveraging that strategy to drive further improvement in our results."