Updated from 12:49 p.m. EDT
Shares of Gateway (GTW) were among the worst-performing technology stocks Thursday, falling 9.2% after the company warned that first-quarter sales would come in below expectations.
Excluding items, the computer maker now expects fourth-quarter earnings of 3 cents to 4 cents a share, up from previous guidance of 1 cent to 2 cents a share. Fourth-quarter sales, meanwhile, are now expected to be between $1 billion and $1.025 billion, compared with the $975 million to $1.025 billion Gateway previously expected. Analysts polled by Thomson First Call are expecting earnings of 2 cents a share on sales of $1.02 billion.
Looking ahead, though, Gateway predicted that first-quarter sales would show a "seasonal decline of 15% or greater" on a sequential basis. Based on fourth-quarter estimates, that would put first-quarter sales at $850 million to $872 million. Analysts had been expecting sales of $926.4 million. Shares traded down 59 cents to $5.95.Activision (ATVI - Get Report) rose 4.7% after the company raised its third-quarter earnings and sales guidance above Wall Street estimates. The video game publisher now expects earnings of 55 cents a share on sales of $615 million, up from previous guidance of 49 cents a share on sales of $500 million. Analysts surveyed by Thomson First Call had been expecting earnings of 50 cents a share on sales of $505.4 million. Activision said that "better-than-expected consumer response to its holiday slate and catalog titles, as well as the strength of its distribution and value divisions" led to the upward revision. Shares traded up 88 cents to $19.50. Shares of Radica Games (RADA - Get Report) fell 9.9% after the company warned that fourth-quarter sales are tracking below its expectations. Radica said that a reduction in orders from a major customer that normally accounts for about 33% of the company's fourth-quarter sales led to the outlook. The company also experienced production shortages and shipping delays, which were caused by U.S. port congestion, according to the company. Gross margins during the fourth quarter, meanwhile, have also been hurt by shipping and material costs. As a result, Radica expects fourth-quarter "earnings per share to be in single digits." Shares of Radica traded down 91 cents to $8.28.