Gateway Sales and Earnings Tumble

The PC vendor took a charge for closing 80 of its 270 stores.
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PC vendor

Gateway

(GTW)

reported that its March quarter sales tumbled 15% from the year-ago period, while the company's loss dramatically widened on a $78 million restructuring charge.

Revenue of $844 million was slightly above analysts' expectations for $838 million.

The company posted a loss of 62 cents a share, according to generally accepted accounting principles. Last year it posted a 39-cent loss.

On a pro forma basis, analysts were gearing for a 40-cent loss in the March quarter. Gateway didn't break out what its earnings would have been without the restructuring write-off.

The restructuring charge will cover the costs of closing 80 stores in Gateway's 270-strong retail network, a move the company announced in March.

PC unit sales were down 30% sequentially and 22% below last year's levels.

"Our performance in the first quarter was affected by the weak economic environment as well as our shift to higher value products and services," said CEO Ted Waitt.

Gateway says it still expects to return to positive operating cash flow by the end of the year, finishing 2003 with more than $1 billion of cash and marketable securities. It reiterated a pledge to reduce its annual selling, general and administrative expenses by $125 million in 2003 and cut its cost of goods by $200 million.