Gateway Profit Soars 35% on Sales of Non-PC Products
Gateway Inc. said Thursday that third-quarter profit rose 35%, meeting analysts’ expectations, boosted by sales of products and services other than personal computers.
Gateway, known for quirky ads and faux cowhide boxes, also cited strong sales to consumers and small businesses and continued progress in Europe, adding that its fourth quarter looked to be on track.
The San Diego-based company reported third-quarter earnings of $152.6 million, or 46 cents a share, up from $113.2 million, or 35 cents, a year ago. That met the forecasts of analysts polled by First Call/Thomson Financial.
Sales rose 16% to $2.53 billion. Analysts expected the PC company to report sales of $2.51 billion, according to First Call/Thomson Financial.
Gateway shares rose to $45 in after-hours trading, according to Instinet, after closing at $43.63, down 99 cents, on the New York Stock Exchange, a low not seen in a year.
Chief Financial Officer John Todd said he expects fourth-quarter results to meet the consensus estimate of 62 cents a share.
Gross profit margins, as a percentage of sales, rose one percentage point to 23.1%, with strong sales of higher margin non-PC, or “beyond-the-box” products and services, such as training, financing and Internet services.
Non-PC income was more than 50% of income, Gateway said, exceeding the company’s fourth-quarter 2000 target of 45%.
“The real message of our third- quarter results is that, while most of our traditional competitors remain focused on hardware, Gateway is realizing its goal of becoming a company that acts as a solutions provider, showing millions of clients worldwide how to get more from their technology,” said Chief Executive Jeff Weitzen.
“We are not a pure-play PC maker anymore and our results last quarter prove the point,” he added.
At a Glance
Other technology sector earnings, excluding one-time gains or charges unless noted, include:
* DoubleClick Inc. said its third-quarter earnings more than doubled to $3.74 million, or 3 cents a share, from $1.23 million, or 1 cent, a year ago, matching forecasts. Revenue grew 79% to $135.2 million. DoubleClick, the largest online advertising company, said it was disappointed with the performance of its Abacus Direct data unit and was taking steps to restructure operations within the division.
* Juniper Networks Inc., a maker of high-speed routers used in computer networks, reported third-quarter earnings of $60.34 million, or 17 cents a share, nearly double the 9 cents analysts were expecting. Revenue surged more than sixfold to $201.2 million from $29.6 million, well beyond analysts’ forecasts of $147 million to $148 million.
* KLA-Tencor Corp., the biggest maker of semiconductor inspection tools, said fiscal first-quarter profit nearly tripled to $105.8 million, or 54 cents a share, beating estimates of 51 cents. Revenue rose 96% to $534.6 million.
* Lam Research Corp., maker of tools that create circuits on semiconductors, said fiscal first-quarter profit more than doubled to $66.1 million, or 48 cents a share, from $24.7 million, or 19 cents, a year ago, beating analysts’ expectations of 43 cents. Sales grew 79% to $432 million.
* PMC-Sierra Inc. said third-quarter profit tripled to $56 million, or 31 cents a share, from $18.7 million, or 11 cents, a year ago, paced by strong sales to makers of computer networking gear. Revenue more than doubled to $198.1 million from $82.5 million.
* Unisys Corp. said it plans to cut up to 1,500 jobs, or 8.3% of its U.S. work force, as it reported a decline in quarterly earnings for the third consecutive quarter. The computer equipment company said third-quarter profit dropped 69% to $42.9 million, or 14 cents a share, as revenue fell 10.5% to $1.7 billion.
* Veritas Software Corp. said earnings jumped 81% in its third quarter to $70.3 million, or 16 cents a share, beating analysts’ forecasts of 14 cents, as sales jumped 73% to $317.2 million.
