Sales Boost Gateway Above Expectations
Gateway Inc. Thursday posted earnings slightly above Wall Street expectations, citing strong sales of its personal computers, PC-related products and services.
The San Diego-based company, the No. 1 direct seller of computers, said earnings grew 26% to $122 million, or 37 cents a share, from $89.2 million, or 28 cents, a year ago. The results beat the Wall Street consensus by a penny, according to First Call/Thomson Financial.
Revenue grew 12% to $2.14 billion. Gross margins were a record 23.3% of sales, an increase of 1.30 percentage points over last year, Gateway said.
“For the second time in two quarters, we have grown net income at triple the rate of our revenue growth, meaning we’re getting the lion’s share of profitable PC sales,” Chief Executive Jeff Weitzen said.
Gateway is comfortable with the Wall Street consensus for earnings of 45 cents in the third quarter, said John Todd, chief financial officer.
Todd also said that the company had met its full-year target of deriving 40% of overall income from non-PC sales, in its so-called beyond-the-box strategy, and that the company is raising that target to 45%.
Gateway fell 44 cents to $70.50 on the New York Stock Exchange.
Gateway’s sales to businesses fell 10% in the second quarter from a year earlier as the company continued to refocus on sales to small and medium-size businesses and government and educational institutions. Gateway said it is targeting flat growth in the third quarter and positive growth in the fourth in the sector.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* Altera Corp.’s second-quarter earnings doubled to $102.6 million, or 49 cents a share, from $51 million, or 25 cents, a year ago, surpassing analyst forecasts of 44 cents, as sales jumped 72% to $340.7 million. The chip maker also announced a 2-for-1 split of its shares, which have more than tripled in price in the last 12 months.
* Juniper Networks Inc. posted earnings of $28.6 million, or 8 cents a share, handily beating analyst forecasts of 4 cents, as sales skyrocketed to $113 million from $17.6 million. In the year-ago period, Juniper had a loss of $2.96 million, or 3 cents a share. Juniper’s shares rose $3.50 in extended trading to an all-time high of $173, after closing up $17.56, or 12%, at $169.50 on Nasdaq.
* PMC-Sierra Inc. said second-quarter profit nearly tripled to $39 million, or 23 cents a share, from $13.4 million, or 9 cents, far exceeding analyst expectations of 19 cents. Revenue more than doubled to $134.1 million from $59.9 million. Despite the performance, PMC-Sierra shares sank $10.94 to $218 in after-hours trading, after closing up $20.88 at $228.94 on Nasdaq.
* Seagate Technology Inc. reported fiscal fourth-quarter operating profit of $52 million, or 22 cents a share, matching forecasts, as the company prepares to take itself private in a complex $20-billion transaction. The world’s biggest maker of computer disk drives didn’t provide year-ago results adjusted for one-time items. Sales fell slightly to $1.55 billion from $1.64 billion. Including one-time gains and expenses, net income fell to $231 million, or 96 cents from $1.02 billion, or $4.53 a share.
* Vitesse Semiconductor Corp. reported operating profit matched forecasts for the fiscal third quarter, jumping to $32.1 million, or 17 cents a share, from $15.2 million, or 8 cents, a year ago, as sales rose 56% to $114.1 million. But investors pounded the chip maker’s shares in after-hours trading. Vitesse had closed up $6.75 at $86.69 on Nasdaq before the results were released.
* Webvan Group Inc. said its second-quarter net loss widened to $57.1 million, or 17 cents a share, from $38.7 million, or 12 cents, a year ago, as it spent more to attract shoppers and enter new markets. Revenue jumped 74% to $28.3 million. The loss was a penny deeper than analysts expected.
