Gateway Cuts 2005 Net Income by 87%

Gateway Inc. cut its reported 2005 net income by 87% after settling a lawsuit and making a change in tax reserves.

Gateway’s net income last year was $6.2 million, or 2 cents a share, compared with a previously reported $49.5 million, or 13 cents, the Irvine-based company said.

Costs of the settlement with Hewlett-Packard Co. totaled $16.7 million in 2005, and tax reserves were increased by $27 million, the company said.

The company raised the tax reserve because it might have to make a substantial payment based on a recent court case involving a different company, Gateway said.

Shares of Gateway fell 1 cent to $2.32.