Gateway beats fourth quarter estimates

Direct PC supplier Gateway managed to beat lowered forecasts resulting from a profit warning earlier this month, despite a fall in fourth quarter earnings.

The company said that it is "comfortable" with analysts' predictions of $0.41 per share for the first quarter of fiscal 2000 and $1.82 for the full year.

"We're confident that our existing product and marketing plans for the year, coupled with even better execution in the market, will allow us to deliver our commitments to shareholders this year and beyond," said Jeff Weizen, Gateway's president and chief executive.

For the quarter ending 31 December 1999, Gateway generated revenue of $2.45 billion and turned in profit of $126 million or $0.38 per share compared with last year's $129.1 million or $0.40 per share.

The supplier had warned earlier this month that its earnings would be $0.37 per share - $0.07 short of Wall Street expectations. It blamed the shortfall on delays in business, the Year 2000 problem, and the "constrained and unreliable" supply of Intel processors and motherboards for $999 to $1,299 machines.

Gateway is now second sourcing such devices from Intel rival AMD.

However, excluding expenses of $26 million or $0.05 per share related to Gateway's recent alliance with America Online and a one-off tax gain related to reducing its full year tax rate, the company would have earned $139.3 million or $0.42 per share.