Made-to-order computer company

Gateway

(GTW)

reported Thursday that its earnings rose 37% in the first quarter. The figures meet Wall Street's expectations, but the results disappointed analysts, who were looking for a penny more, the so-called whisper number.

The San Diego-based company said it earned $136 million, or 41 cents a diluted share, compared with $99.6 million, or 31 cents a share, in the first quarter of 1999.

Analysts surveyed by

First Call/Thomson Financial

had a consensus estimate of 41 cents a share in the latest quarter.

Revenues rose 11% to $2.34 million from $2.1 million on strong sales of Internet subscriptions and products through

Gateway Country

retail stores.

Gateway, together with partner

America Online

(AOL)

added 300,000 new subscribers in the quarter for a total more than 1.3 million.

The company that once pursued a pure mail-order business model added 38 new retail outlets in the period for a total of 318 stores.

Shares of Gateway fell 4 1/8, or 7%, to close at 51 1/8 ahead of the earnings announcement. It was little changed in after-hours trading.

Many investors had hoped that strong earnings reports from the chip makers and the hardware sector could help reverse the technology-led Nasdaq drop. On Wednesday,

Advanced Micro Devices

(AMD) - Get Report

reported earnings that far exceeded Wall Street expectations. That earnings result helped set the tone for Thursday's reports from Gateway and

Sun Microsystems

(SUNW) - Get Report

.

After the stock market closed, Sun reported that its earnings rose 44% in its third fiscal quarter,

beating Wall Street's expectations by 3 cents a share, as its revenues topped $4 billion for the first time.