Gateway Changing Accountants

PC and consumer electronics vendor Gateway(GTW Quote) said it's trying to line up a new accounting firm after PricewaterhouseCoopers (PwC) indicated Thursday evening it no longer wants to work with Gateway.

Changes in accountants can serve as a yellow light to investors. Accounting firms don't normally forsake customers with whom they have good relations, unless there's potential concern over accounting practices. Under prior management, Gateway gained a reputation for extremely aggressive accounting practices and came under subsequent investigation by the Securities and Exchange Commission.

In April 2003, the company had to delay its 2002 annual report because it needed to restate 2000 and 2001 revenue and costs of goods sold.

However, in a press release issued after the close, Gateway denied that it disagreed with PwC "on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure."

The company claimed to be in advanced discussions to appoint a new firm.

Also Thursday, Gateway said it's completed its acquisition of eMachines, first announced Jan. 30. With the change, eMachines CEO Wayne Inouye becomes head of Gateway, succceeding Gateway founder Ted Waitt. Waitt remains chairman and the company's largest stockholder.

In regular trading, Gateway shares slid 18 cents or 3.4% to $5.19.