Gateway Reports Solid Quarter But Problems Linger

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Gateway Gets Profit Lift [TheStreet.com]

Summary: Gateway surprised the Street by announcing earnings of 5 cents per share yesterday, on especially strong results from its consumer sales unit. Consensus was for the PC-maker to break even but a lucrative tax break and a payment from Microsoft from a 2005 settlement brought the company soundly into profit territory. On the quarter, Gateway reported net income of $18.1 million on revenue $963 million. In the year ago period, earnings were just 4 cents a share but total revenue was 5.5% higher. There were certainly other negative aspects to Gateway's quarter as well; most significantly, declines in revenue in its professional unit, which includes sales to business, government and education, as well as in its direct-sales unit - by 8% and 44% respectively. Shares of Gateway gained 4.9%, or 8 cents, to $1.72 in after hours trading on the news. Despite his company's respectable results, recently appointed-appointed CEO Ed Coleman, said "I come to Gateway with a sense of urgency. While we have many strengths, business as usual is the farthest thing from my mind," Coleman said in his first earnings conference call as CEO.
Related links: Gateway Q3 2006 Earnings Call Transcript • Gateway Investor Group Demands Change • What Really Makes Money for Circuit City, Best Buy, Gateway & Dell? • Gateway Denies Price Pressure in the PC Market • Gateway a Promising Acquisition Target • Gateway Slammed as Price Declines Offset Unit Growth • Gateway Net Rises, But Revenue Falls; Direct Sales Plunge
Potentially impacted stocks and ETFs: Gateway (GTW), Dell (DELL), Hewlett-Packard (HPQ), Lenovo (LNVGY.PK)

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