Article Abstract:
Gateway Inc. post a 35% profit increase for the third quarter and a 20% rise in sales compared to 1999. CEO Jeffrey Weitzen forecast a 4th quarter profit increase of 48% to 62%. The opening of 35 new Gateway Country stores helped keep PC sales high compared to slowdowns at Dell Computer Corp. Gateway's stock rose $2.62 in after-hours trading.
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Article Abstract:
In a major cost-cutting move and restructuring, Gateway Inc. announced a 25% workforce reduction and the cessation of operations in Europe and Asia. The company also announced a third-quarter charge of $475 million on top of $553 million in charges earlier in the year. Gateway cited the slowdown in demand for personal computers as the primary reason for its troubles and stated plans to move into the computer services market.
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Article Abstract:
Failure of sales to meet projections at two computer makers reflects a diminishing demand worldwide for personal computers, according to analysts. Compaq Computer Corp., the world's largest PC maker, has issued a warning on softening sales in Europe and North America. Demand from small and medium businesses were below expectations while demand from large companies and home users met forecasts. The company will prepare for reduced demand by cutting expenditures. Gateway Inc. has experienced what they call a seasonal drop in business. Analysts consider that these may signal an end to the industry's growth, and, pointing to declining prices, suggest that the peak in revenue for sales of home PCs may already be past. Surveys by Ziff Davis Market Intelligence show a January decline in sales of computers to small businesses of 8% compared to a year ago. Sales to larger businesses made up the difference resulting in an increase in unit sales of 3%, still well below analysts original expectations. Compaq shares were down 14% to $35.374 and Gateway fell 9% to $72.6875 on the New York Stock Exchange. Intel Corp. lost 6%, falling to $119.9375 on the Nasdaq.
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