Gateway Reports Massive Loss, Sticks by Second-Half Targets

Gateway (GTW Quote), as promised, delivered a first-quarter bottom line that fell dramatically from the year-ago period, but the company stuck by its prior guidance for the rest of the year.

For the quarter ended March 31, the company lost $503 million, or $1.56 a share, including pretax charges of $533 million and $24 million in costs associated with an accounting change. The company earned $120 million, or 36 cents a share, a year ago. Excluding the charges, Gateway lost $79 million. According to Thomson Financial/First Call, analysts expected the company to lose a penny a share for the period, but Gateway didn't provide a per share figure before the items.

A company representative couldn't be reached for comment, but a televised report indicated that the company lost 17 cents a share before the charges.

Sales fell 15% to $2.03 billion from more than $2.39 billion in the same quarter last year.

Gateway expects income from continuing operations, excluding special charges, to "approximately break even" for the rest of the first half of the year, despite seeing unit sales down slightly from a year ago. For the second half of the year, the company expects unit sales to rise compared with last year, and Gateway expects to report positive income from continuing operations.

In the second quarter, the company expects restructuring charges of $25 million. Gateway expects to record additional charges of $10 million in the third quarter.