Intel Corp.'s inability to fill orders for Celeron microprocessors and motherboards from Gateway 2000 Inc. cost the computer vendor US$200 million to $250 million in the last quarter, Gateway's chief financial officer said yesterday.
As a result of the slowed shipments, Gateway was prevented from meeting demand for its popular personal computers priced from $999 to $1,299, the company's "sweet spot" of products, John Todd, the chief financial officer, said in a conference call.
"What resulted was the inability to deliver on the consumer sweet spot and we think that cost us $200 to $250 million," Todd said. "Because of inconsistent delivery (of Intel products), at any given time, we didn't know what processors we would have for the next couple of days, and that didn't allow us to have a coherent message."
Gateway presently uses Intel as a sole supplier of processors and motherboards, Todd said. However, Gateway will "resolve" the supply issue by the end of the month, he added. Earlier this year, Gateway stopped a supply arrangement with Intel rival Advanced Micro Devices Inc.
Intel officials declined to comment today, saying the company is in a quiet period before the release of first quarter earnings.
However, one analyst said Gateway may be laying too much blame about its failure to meet demand in the busy holiday season on Intel.
"One of Gateway's problems is they did not forecast for demand properly," Mario Morales, director of semiconductors for International Data Corp., an industry research firm based in Framingham, said. "Intel told us they were able to meet demand for their customers, but not for the upside business (for requests for added supply)."
Intel's release of 18 new products centered around high-end Pentium and Xeon processors also occupied much of the company's efforts during the holiday season, Morales said. "It was an aggressive move by Intel, but they (the products) needed a lot of attention."
Gateway 2000 Inc., based in North Sioux City, South Dakota, can be reached at +1-605-232-2000 or on the Web at http://www.gateway.com/. Intel, in Santa Clara, California, can be reached at +1-408-987-8080, or at http://www.intel.com/.