Gateway computer company said last night that it expects to post fourth quarter sales and profits significantly lower than Wall Street estimates because consumer holiday sales over the Thanksgiving weekend in the US have been much weaker than expected.
CFO John Todd said the decision to warn investors came after holiday sales, traditionally the kick-off to the profitable Christmas sales season, were 30% below last year's personal computer sales. Earlier yesterday, Merrill Lynch had reduced their sales estimates for the quarter.
The company, which has its European headquarters in Clonshaugh in Dublin, said it expects to report revenue of about £2.55 billion for Q4, about equal to the same period last year and $500 million below previous estimates.
The number four maker of PCs for the US market said it expects operating income of at least 37 cents per share, which is 25% below analyst consensus estimates. The company said it could report a loss of two cents for the fourth quarter.
The company also said that it is guiding profit estimates lower for 2001. It now expects earnings per share of $1.89 for the full year of 2001, as opposed to previous estimates of £2.28.
Gateway's warning was the latest to hit the PC sector in recent months. Hewlett Packard, Dell and Apple have all scaled back their second half growth targets and the possibility of a price war and the lack of a holiday season sparkle could lead the sector even lower, some analysts predicted.
Gateway made the announcement after Wall Street closed and its shares dropped $8 in after hours trading. That was about 27% off the regular session close of $29.50 and over 70% from its year high of $81.50.
