Is a PC "price war" brewing?

By : |November 30, 2000 0

NEW YORK: Gateway Inc. chief financial officer John Todd said on Wednesday he
expects a price war in the personal computer industry, given high inventory
levels.

"Clearly we think in Q1 there will be an aggressive sort of price
war," he said. "People are going to have to be aggressive to get the
inventory out."

He also detailed guidance for 2001 sales and earnings per share.

                                 

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Gateway Inc. announced on Wednesday that it expected fourth-quarter sales and
profits to be significantly lower than Wall Street estimates because consumer
holiday PC sales have been much weaker than expected.

Gateway, the No. 4 maker of PCs for the US market, said it expected to report
revenues of about $2.55 billion for the fourth quarter, about equal to the same
period the previous year, and $500 million below previous estimates.

Gateway said it expects operating income of at least 37 cents per share – 25
cents below analyst consensus estimates. Gateway also will take a one-time
charge of about $200 million, or 39 cents per share, related primarily to the
write-down of the company’s investments in technology-based companies.

Including the charge to earnings, Gateway said it could report a loss of 2
cents for the fourth quarter.

"We expect consumer sales to continue ramping up this quarter, but it is
now obvious to us following the Thanksgiving weekend that they will not grow
sufficiently to allow us to meet previous consensus for EPS and guidance for
revenue," John Todd said in a statement

"The economic slowdown, coupled with on-going shifts in PC seasonality,
clearly had a significant impact on our sales over the holiday weekend,"
Todd said.

(C) Reuters Limited 2000.

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