Gateway Reports Q2 Earnings of US$122M

BOSTON (07/13/2000) - Fueled by continued strong sales of PCs to consumers, Gateway Inc. on Thursday said that its net income for the second quarter hit US$122 million, with quarterly earnings of 37 cents per diluted share, topping analyst estimates.

The reported net income is 36 percent above the year-ago quarter and comes in at 1 cent per share over analyst estimates, Gateway said. Quarterly revenue rose 12 percent to $2.14 billion year over year.

Gateway shipped 1.2 million units in the second quarter, ended June 30, 2000, compared to 1 million a year ago equivalent to an increase of 17 percent. The company's consumer division experienced a 32 percent rise in revenue and a 39 percent increase in units. Gateway attributed the solid shipment growth to better availability of midrange microprocessors, motherboards and DRAM (dynamic random access memory).

The company further reported strong growth outside of the U.S. Gateway's Europe, Middle East and Africa (EMEA) division posted 21 percent growth in year-over-year revenue, while Asia-Pacific experienced 20 percent growth for the quarter.

Gateway historically has a stronger second half of the year financially -- as do other PC makers -- because of back-to-school and holiday sales. The company expects this year to follow that same track and intends to start offering its first Internet appliances that are being co-developed with America Online Inc.

(AOL). The first device will be for kitchen countertops and is supposed to go on sale before the holidays, Gateway said.

Despite the positive second quarter and the outlook for the rest of the year, Gateway officials apparently aren't entirely pleased. The company hasn't realized its potential when it came to the business-to-business market and must aim to improve in that area, according to a Gateway statement outlining the quarterly financial report.

Gateway's solid quarterly showing is an indication that other vendors due to release earnings statements next week also will post strong gains. PC vendors Apple Computer Inc. and IBM Corp., which vie with Gateway for market share, will release reports next week, as will rival chip makers Intel Corp. and Advanced Micro Devices Inc. (AMD).

Gateway, in North Sioux City, South Dakota, can be reached at +1-605-232-2000 or

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