The fallout from Irvine-based Gateway Inc.’s bleak outlook for the current quarter continued Friday with shares of the computer maker falling more than 10%.
On Thursday, Gateway said it expects sales for the first quarter to be below what Wall Street analysts had expected. The company also expects to break even or lose money in the quarter.
The news obscured gains in fourth-quarter results for Gateway, which is working to turn itself around after buying Irvine’s eMachines Inc. and relocating from Poway to Orange County last year.
In the fourth quarter, Gateway said it earned $94 million, reversing a loss of $114 million in the year-ago quarter.
Gateway’s profit was helped by a $100 million gain from the retirement of shares that had been held by Time Warner Inc.’s America Online.
Excluding the gain, Gateway would have lost $6.6 million.
Still, the company said it’s seeing stronger sales of computers at stores. Chief Executive Wayne Inouye has made selling via big electronics stores,and closing Gateway’s own stores,a key plank in his turnaround strategy.
Gateway said it shipped 1.2 million PCs during the fourth quarter, a 128% gain from a year earlier.
For the first quarter, Gateway said it expects sales of $810 million and $850 million. Wall Street analysts had forecasted a profit of a penny a share on revenue of $897 million.
The results and outlook are a mixed bag for Inouye, who turned around eMachines and would up running Gateway. The former Best Buy Co. executive’s strategy of tapping big retailers is bringing sales.
But making Gateway consistently profitable remains the challenge.
