Beleaguered Gateway shares plunge on weak outlook

“Shares of Gateway Inc. plunged Tuesday after the computer maker said it turned a profit for the first time in more than three years, but also jolted investors by slicing its full-year sales and earnings outlook,” Elliot Spagat reports for The Associated Press. “Gateway shares fell 70 cents, or 18 percent, to $3.19 in early trading on the New York Stock Exchange. The stock has traded in a 52-week range between $2.78 and $6.92.

“Revenue grew 4.2 percent to $873.1 million from $837.6 million, boosted by booming PC sales. The company sold more than 1 million PCs during the quarter, up from 795,000 last year,” Spagat reports. “Gateway, based in Irvine, said pricing and component-cost pressures contributed to its lower earnings forecast for 2005. It cut its profit estimate to between 11 cents and 13 cents a share from its previous estimate of between 15 cents and 17 cents a share and its revenue forecast to between $3.9 billion and $4 billion from between $4 billion and $4.25 billion.”

“‘There’s no safe haven for Gateway, it’s all about PCs,’ said William Fearnley, a securities analyst at FTN Midwest Research in Boston. ‘They’re more dependent on PCs than any of their major competitors, most notably Dell and Hewlett-Packard.’ Gateway ended last year with 1,900 employees, down from 7,400 at the end of 2003 and 24,600 in 2000,” Spagat reports.

Full article here.

MacDailyNews Note: Long-time MacDailyNews Readers know about the now-mandatory use of the word “beleaguered” whenever Gateway is mentioned. More info in the article, “Beleaguered Gateway puts on a happy face,” which also contains what is believed to be the first recorded use of “moo” on MDN. We now have 40 months left until December 16, 2008, when we’ll officially check in to take measure of beleaguered Gateway.

Related MacDailyNews articles:
Beleaguered Gateway announces ‘iPod Photo killer’ (with image) – October 28, 2004
Beleaguered Gateway launches ‘iMac G5 killer’ – September 21, 2004
Beleaguered Gateway to ditch consumer electronics to focus on PC box assembly – September 13, 2004
Beleaguered Gateway cuts another 1,500 jobs; has cut 22,600 jobs in last four years – April 30, 2004
Beleaguered Gateway grinds up customer and spits him out unsatisfied – April 02, 2004
Beleaguered Gateway closes all retail stores; Apple poised to open 77th outlet – April 01, 2004
Beleaguered Gateway to axe over 2,000 jobs in next few months – March 03, 2004
Beleaguered Gateway to buy eMachines; combo could be 3rd largest Wintel box assembler – January 31, 2004
Beleaguered Gateway cuts more jobs; closes Virginia manufacturing plant – September 03, 2003
Beleaguered Gateway puts on a happy face – December 16, 2002
Beleaguered Gateway desperately circling the drain – September 25, 2002


  1. Hey, Victory — how you doin? Long time no moo. Yeh-heh-hehesssss. Hey, I keed de bovine flatulators among us. No seriously, Vic — give me a call on my cell later. Maybe we can set up a tag team here on de boards. Or later with one of de Hilton sisters. You know, de pretty one.

    But seriously, Gateway reminds me of my late grandfather. Yeh-hessss. I mean, he was walking around with one foot in de grave for several years before he died too.

  2. But my favorite thing about Gateway:

    Number of PCs sold for the quarter ending June 30: 1,009,000.
    Number of Macs sold for the quarter ending June 25: 1,182,000.

    In Gateway’s defense, they only sell to the U.S. whereas those 1,182,000 Macs were sold world-wide. Still…

    When Apple ships more computers than you do, you know you’re in trouble. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    (Magic word: “Served”–I think that says it all)

  3. RE: Peter

    The fact that Gateway sold nearly as many computers as Apple in the same quarter isn’t that interesting. Gateway has thousands of direct competitors, whereas Apple is the only company selling Macs.

  4. Cool –

    I don’t think that’s the point Peter was trying to make. He was just pointing out the fact that Macs sold better than a PC vendor this quarter is all.

    Get ’em one at a a time….

  5. This is a major victory for Apple. Why? Because Gateway was the only other computer company that had actual stores thoughout the country to sell their products. Gateway had to shut it down because it was doing so badly, but Apple gets crowds of people at every opening, even people from other countries that just came to see the opening. You have to say, Apple has wooped Gateway.

  6. If it weren’t for a $150M settlement with Microsoft (paid over 4 years), they would’ve had a loss again, for the 14th consecutive quarter. Frankly, I’m surprised they’re still around. ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  7. There was no $150M settlement paid over 4 years. There was a symbolic $150 million investment in Apple stock, returned after 5 years. And M$ owed it to Apple in a legal spanking.

    The $150 million in NON-VOTING stock and the promise to continue development of MSOffice for Mac was in exchange for Apple dropping all their lawsuits for copyright and patent violations.

    The deal is long since over, and had, arguably, nothing to do with keeping the company afloat whatsoever. ($150 million probably wouldn’t have covered a few month’s salaries, let alone save the company.) The deal was more of a “good faith” investment, designed to stem the bail-out of other investers and attract new investors. At the time, Apple had somewhere around $2.5 to 3 billion in the bank — a total of $8B in assests.

  8. Wasn’t this thread about Gateway? Perhaps I should have made it more obvious that I was referring to Gateway, not Apple. I’m not sure how I was misinterpreted, though, especially with the reference to the consecutive quarterly losses. Oh well, some people get defensive I guess.

  9. going down in flames: “If it weren’t for a $150M settlement with Microsoft (paid over 4 years), they would’ve had a loss again […]
    or maybe you’re just going down: “There was no $150M settlement paid over 4 years. There was a symbolic $150 million investment in Apple stock, returned after 5 years.

    Whoa! Cool your jets!

    Back in April, Gateway settled an antitrust suit with Microsoft for $150 million. It’s a coincidence that it’s the same amount of stock that Microsoft bought in Apple back in 1997.

    However, according to Gateway, they had a net income of $17.2 million and Microsoft’s settlement contributed $15.1 million. So without Microsoft’s settlement, they’d have pretty much broken even with $2.1 million.

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