, the second-biggest direct seller of PCs after
, posted a 36% increase in second-quarter earnings Thursday, squeezing past Wall Street's estimates by a penny.
The San Diego, Calif.-based company reported earnings of $122 million, or 37 cents a diluted share, compared with $89.2 million, or 28 cents a share on a split-adjusted basis, in the year-earlier quarter. Analysts surveyed by
First Call/Thomson Financial
had projected earnings of 36 cents a share in the latest quarter.
Revenue rose 12%, to $2.14 billion, from $1.91 billion in the second quarter of 1999.
"For the second time in two quarters, we have grown net income at triple the rate of our revenue growth, meaning we're getting the lion's share of profitable PC sales," said Jeff Weitzen, Gateway president and chief executive, in a statement.
With that said, the company noted that sales to businesses declined by 10% in the second quarter and warned that they would remain flat into the third quarter before rebounding in the fourth quarter.
"We're still not living up to the potential of our brand and our unique market position in the business-to-business-arena, but we're moving in the right direction," Weitzen said. "We're redoubling our efforts to build capability and deliver world-class execution against our beyond-the-box strategy among our core business markets, and I'm confident we'll see continued performance improvement in this sector in the quarters ahead."
Shares in Gateway rose slightly ahead of the news on Thursday, ending regular trading up 1/16 at 71. In afterhours trading, the stock was up an 1/8, to 71 1/8, according to