Gateway, Inc. (NYSE: GTW) fell 1.80 to 21.10 Friday after the companyreported a fourth-quarter loss, and announced a restructuring plan thatincludes cutting more than 10 percent of its staff and taking a US$50 millionpre-tax charge to first-quarter results.
The San Diego, California-based computer maker said results were worse thanits already lowered expectations “due to a continued deterioration ofworldwide PC demand and increasing pricing pressure, both of which areexpected to continue at least through the first half of this year.”
The company said it lost $94.3 million, or 29 cents per share, during thequarter, including a $187 million pre-tax charge for the write down oftechnology investments and other assets, compared with a profit of $126million, or 38 cents per share, a year earlier. Revenue totaled $2.37billion, down from $2.55 billion.
“While Gateway’s 2000 results were not as we had hoped, our core strategy ofbeing a trusted guide for technology and of providing products and servicesin addition to the PC — our ‘beyond-the-box’ initiative — is the right strategy, and we will continue to execute against it,” said president andchief executive officer Jeff Weitzen.
Sales of non-PC products and services accounted for 24 percent of revenue and 100 percent of operating income, the company said.
Slow PC sales have led to a glut in inventories across the market, resulting in “an aggressive pricing environment that will have negative consequences forthe PC sector for the next six months,” said Weitzen.
In addition to focusing on its non-PC businesses, Gateway said it will cutselling, general and administrative expenses, streamline its manufacturingprocess and consolidate its vendors.
For the full year, the company posted a profit of $315.9 million on revenueof $9.7 billion, or 95 cents per share, 28 percent below the prior year.Excluding the charge, net income rose 3 percent from 1999.
For 2001, Gateway said it expects revenue growth of just 3 percent andoperating earnings growth of 6 percent, “reflecting the expectedcontinuation of the present economic environment through the first half andan expectation of improvement in the second half of the year.”