Despite Shift in Strategy, Gateway Is Still Struggling

Gateway Inc. said Monday that its quarterly revenue would fall as much as 10% below its previous expectations, as its strategy to sell a broad array of consumer electronics failed to offset persistent problems in its PC business.

Gateway said that it now expects fiscal fourth-quarter revenue of about $880 million, lower than its previous forecast of $925 million to $975 million. It also said it sees an operating loss at the low end of its previous earnings-per-share forecast.

Poway, Calif.-based Gateway had said it expected a fourth-quarter per-share loss before items of 9 cents to 15 cents.

The company, while noting strong gains in the percentage of total revenue garnered from the sale of consumer electronics gizmos, said tight supplies of its 610 Media Center PC, its Family Room Media Center PC and high-definition TV models crimped sales.

Gateway also said pricing promotions from rivals such as Dell Inc. and Hewlett-Packard Co. hurt sales of its own PCs, particularly in the higher-margin notebook market and the low-priced desktop PC market.

Ted Waitt, the co-founder, chairman and chief executive of Gateway, announced last spring the company’s plan to become what he has called a “branded integrator.” The company has since launched sales of digital cameras, plasma and flat-panel TVs, as well as hand-held computers and other devices that can link to personal computers.

Shares of Gateway rose 16 cents to $4.98 on Monday on the New York Stock Exchange in regular trading. The stock was halted in after-hours trading pending the announcement.