“Computer maker Gateway Inc. on Thursday said it swung to a loss in the second quarter on deteriorating gross margins and sluggish revenue growth. Company shares fell more than 6 percent on the news,” Gillian Flaccus reports for The Associated Press.
“Gateway lost $7.7 million, or 2 cents per share, down from a profit of $17.2 million, or 5 cents per share, last year, when the company recorded a $15.1 million gain from a legal settlement with Microsoft Corp. This year the company reported a comparable $8.6 million benefit from Microsoft,” Flaccus reports.
“Revenue rose 5 percent to $919 million from $873 million last year,” Flaccus reports. “Analysts, on average, expected the company to earn 2 cents per share on $1 billion in revenue, according to a Thomson Financial survey.”
“Gross margin for the quarter was 5.5 percent, down from 10 percent in the same period last year,” Flaccus reports. “In after-hours trading, Gateway shares fell 6.3 percent, or 10 cents, to $1.49 after closing Thursday at $1.59 on the New York Stock Exchange. Gateway, which is the No. 3 PC-maker in the United States, has struggled with falling stock prices, the departure of former Chief Executive Wayne Inouye and its recent removal from the S&P 500.”
Full article here.
MacDailyNews Take: Buying eMachines bought them some time, but the prognosis for Gateway isn’t good. What a long, drawn-out death! It also goes to prove that market share without healthy margins is worthless.
Related MacDailyNews articles:
Beleaguered Gateway’s CEO resigns – February 09, 2006
Beleaguered Gateway on the ropes, Gartner says PC industry due for shakeout – August 23, 2005
Beleaguered Gateway shares plunge on weak outlook – August 16, 2005
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
You said it MDN! Better to be No. 6 and profitable than No. 5 and bleeding red ink.
MW: soon, i.e. when Apple will be in the top 5.
Is anyone else sick of the word Beleaguered? It was old when they used it on Apple in the 90’s, now its just annoying. Isn’t the Mac press better than the PC press? I guess not.
Well, Gateway, I’m afraid you should go home and get your affairs in order. Your time here is limited.
Beleaguered,
“Beleaguered” has long been used as payback by MDN. It’s done tongue-in-cheek. Note how it is uniformly used in every related Gateway article.
So much for the power of gateway drugs.
Gateway sucks.
Gateway’s stock once traded near $85 per share. Today it trades around a $1.50 per share. Shameful.
I don’t know why there are all these ‘downers’
I recently bought a really nice Gateway!
It’s black cast aluminum exterior is beautiful, and is really sturdily built. It will do a fine job of keeping the kids & dogs in the yard….
er, sorry, posting to the wrong message board again….
Who’s Gateway?
Connor, Gateway is #3 in the US, Apple #4 – more later.
Beleaguered, Judge Bork, I may have incited that with my email.
Dell’s Market Cap is about $50 Billion
HP’s is about $90 Billion
Gateway’s is about $560 Million
Apple’s is about $59 Billion
Lenovo’s is Not Available
How long will it be before Gateway can no longer sustain its market share? It seems obvious they are playing out of their league.
MW – “youre” … even my spell checker knows it should be “you’re”. Or “your”. Or “yore”.
Another $7m gone from Gateway’s balance sheet. And the figure would have been worse had Microsoft not stumped up $8 million or so. Ho hum…
The next major date for for those interested in Apple’s competition is HP’s 3Q (to 07/31/06) results, which will be released on August 16th and Dell’s Q2 report which is due on 17th August at 5pm Eastern Time.
DLMeyer,
Lenovo is available under the symbol LNVGY and is apparently worth the princely sum of around US$2.75 billion having been worth around US$5.5 billion at some point in the last 52 weeks.
These guys are going to be acquired by someone. Declining market share, bad margins, crappy products, little presence outside of the US. They are dying slowly. I think Apple actually has a shot at caching them.
How is Gateway ahead of Apple in marketshare? They sold 1.17M computers in the last quarter. Didn’t Apple sell more than that?
I like to use ‘yer’. It makes me feel like a pirate. Is that acceptable, matey? Arrrr!
Apple ‘only’ sold around 764,000 computers in the USA, whereas Gateway sold around 1.093 million in the US. Hence why Gateway are above Apple in the US rankings.
Neither of them currently count as a Top Five Global Manufacturer in terms of units, although Apple is ‘only’ 400,000 units off at the moment – which probably represents where they could be in three quarters assuming Adobe can pull their collective finger out and get CS Studio to market in early ’07.
If Apple can avoid any execution snafus, there is no reason why we shouldn’t be looking at Apple achieving around 8 million CPU units in 2008-9 and, unlike the Windows market where the manufacturers are actually paying Microsoft to Redmond’s box assembly subcontractors, these are profitable sales which are holding steady at around $1300/unit as opposed to the sub-$700 ‘shark tank’ that Dell, Gateway and others compete in.
8 million CPU units should be worth around $10 billion in sales, add in another $8 billion of iPod/personal entertainment do-dads and $6 billion dollars of incidentals (like iTMS, software and displays) and we should see Apple posting sales of $25 billion.
Of course, if there is an Apple iPhone (or whatever) and it’s well received, all bets could be off about were their finances are going.
Wait a minute…
According to the press release, Gateway shipped 1,170,500 PCs in the latest quarter. Apple shipped 1,327,000 Macintoshes in it’s latest quarter. So Apple shipped more Macs than Gateway shipped PCs in the latest quarter.
In Gateway’s First Quarter–Apple’s Q2–Gateway shipped 1,379,000 PCs. Apple shipped 1,112,000 Macintoshes.
With the help of our friendly little calculator, We see that Gateway shipped 2,549,500 PCs so far this year. Apple has shipped 2,439,000–a difference of 110,500 units.
One more quarter and Apple will end up ahead. Of course, the PC press will finagle the market share numbers somehow, seeing how a difference of 110,500 units somehow equals 1.5% of the market.
Fanatic Realist, I checked the stock via Yahoo! Finance and was informed the Market Cap is “N/A”.
I am well aware of the fact that Gateway sold more units in the US and that is the reason it is #3 in that market, ahead of Apple. Units sold is one measure of success, profits another, market cap yet another – and they are only vaguely related to each other. The numbers I offered show HP, at #2, with a market cap near twice that of #1 Dell.
LorD 1776, “yer” may be perfectly fine, but if you pronounce it like “you’re”, “your”, or “yore” it totally loses its cachet, don’t you know? Takes all the fun out of it.
JEG, why would someone acquire them? The tax loss? They lack a market, they lack a plan, all they have in abundance is debt. Their margins are razor thin, and when you play with razors … someone’s going to bleed.
“. . .whereas Gateway sold around 1.093 million in the US. “
What a huge waste of money. Except for phishers and hackers.
I don’t even want to make fun here. Just read me the report once they’re gone. Until then, shut up about it. They (the press, media, analysis, user community at large etc) predicted the death of Apple for more than a decade. They made a living off of bashing Apple with these predictions giving Apple a constant and considerate uphill climb. It’s not any better that they’re now doing it to Gateway. If Gateway dies, then tell me, but until then, give them a fair break and shut up about it.
Now when an “iPod killer” goes down, I want blow-by-blow details as they all used the iPod’s popularity to get free press by boasting about how they were going to kill the iPod. They deserver every ounce of bad press as they circle the bowl.
i work at quanta in the united states and we primarily do work on getway notbook computers. essentially the ones that need repair. no one who works there would dare buy one of the machines. they are poorly built and poorly engineered pieces of plastic and metal. we have some that burn, some that break, and some with piss on them.
the place is hell to work at because there are so many problems with their systems. who keeps buying them?
they make us work over 60 hours a week because there are so many broken and improperly working notebooks. its rediculous. and don’t get me started on the viruses and spyware i see. we just os reload them at that point.
bottom line gateway needs to close and i need a new job. i wonder if apple is hiring.