Gateway Reports $8.6M Net Loss In First Quarter

By Doug Olenick -- TWICE, 5/21/2007

IRVINE, CALIF. — Gateway posted a net loss of $8.6 million for its first quarter, ended March 31, narrowing its loss from $12.3 million during same period last year, the company reported earlier this month.

The $8.6 million loss came on sales of $1 billion, down slightly from the $1.1 billion generated during the first quarter of 2006. The overall number of computers shipped by Gateway was down 9 percent to 1.3 million year-over-year, and gross margin fell to 4.9 percent from 7.3 percent.

The company's retail segment experienced flat sales of $766.3 million as retail PC unit sales fell 6 percent year-over-year to 1.09 million. Gateway said these changes reflected a shift to higher opening price points. The company has kept inventory at less than four weeks.

Gateway's direct segment suffered a 20 percent decline in revenue compared with the first quarter last year taking in $86.7 million. Direct PC unit sales were 46,700, a 20 percent decline from the prior year, although the first quarter of 2007 was 16 percent better than the fourth quarter of 2006.