Updated from 4:57 p.m. ET

Gateway

(GTW)

badly missed its already lowered fourth-quarter earnings estimate and cut its projections for 2001,

minutes after

Hewlett-Packard's

(HWP)

profit warning, citing the "continued deterioration of worldwide PC demand and increasing pricing pressure."

The box maker said excluding items, it earned $37.6 million, or 12 cents a share, compared with $126 million, or 38 cents a share, a year ago. Analysts on average were expecting fourth-quarter earnings of 37 cents a share. Including a $187 million pretax charge, Gateway reported a fourth-quarter loss of $94.3 million, or 29 cents a share.

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The company already issued a fourth-quarter warning late in November, causing the analysts' consensus estimate to come down sharply, to the current 37 cents from 62 cents.

Gateway also said it would reduce its worldwide employment ranks in the first quarter by more than 10% and take a $50 million pretax charge. Analysts are expecting the company to earn 45 cents a share for the first quarter, compared with 41 cents a share a year ago.

Gateway also slashed its 2001 expectations. The company now sees earnings-per-share growth of 6%, and revenue growth of 3%, compared with 2000. For the full year 2000, Gateway earned $448 million, or $1.36 a share, compared with $428 million, or $1.32 a share, in 1999. Analysts on average called for 2000 earnings of $1.60 a share. Full-year revenue was $9.7 billion, up from $9 billion in 1999.

"Softer sales have caused inventories of our competitors to swell, and have touched off an aggressive pricing environment that will have negative consequences for the PC sector for the next six months," Gateway said.

Shares of Gateway ended the

New York Stock Exchange

regular session at $22.90, up $2.96, or 14.8% on the day, but fell to $20 in extended-hours trading on

Instinet

.