Gateway turned in a storming financial performance for the fiscal year with turnover and profits far exceeding 1995 results. The company attributed a measure of its success to sales of the Pentium Pro, a chip that Intel does not think of as a consumer microprocessor, confirming the change in the chip giant?s strategy.
During the last quarter of financial year 1996, sales of Pentium Pro PCs accounted for 27 per cent of Gateway?s desktop sales. Two weeks ago, John Shepheard, managing director of Gateway UK, said that his company was becoming a force in the server market.
The company said it supplied nearly two million PCs in the year, an increase of over 43 per cent. Profits rose by a staggering 45 per cent year on year to $3.21 million, based on a turnover of $5.04 billion. In the previous year, its turnover was $3.68 billion.
That, said Ted Watt, the chairman and CEO of Gateway, made 1996 a ?great year? for the company. Shareholders, he said, had noted that the value of their stockholding in Gateway had risen by 119 per cent.
Gross margins for the last quarter of Gateway?s financial year were also respectable at 19.5 per cent. PC companies have to subtract variables including cost of sale from this figure before the true profit becomes apparent but few vendors are able to reach that figure, gross.
Gateway?s success in selling Pentium Pros is likely to worry other vendors in the business. Dell does not divide shipments of different processors out in its results while Compaq insists that its network management software means that people who ship Pentium Pro servers without value add cannot enter the market.
A representative said: ?What?s the point in people buying a Pentium Pro as a desktop machine if you don?t need it? Gateway?s machines are PCs and Compaq?s are servers and there?s a big difference between the two.
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