Gateway Delays Q2 Earnings Release - Twice

Gateway Delays Q2 Earnings Release

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Irvine, Calif. — PC-maker Gateway said this week it was delaying the release of its second-quarter earnings until Aug. 4, pending the outcome of the company’s voluntary request for final guidance from the U.S. Securities and Exchange Commission’s Office of the Chief Accountant on the proper accounting for elements of the April 2005 agreement with Microsoft.

The guidance requested includes income statement classification of the marketing and development-related program-spending benefits of the Microsoft agreement. The resolution of the Microsoft accounting treatment will only result in additional benefits or income to Gateway.

“Because of the complex accounting interpretation issues related to our agreement with Microsoft, we voluntarily made a pre-filing submission seeking the SEC’s guidance to ensure we apply proper accounting treatment,” said Rod Sherwood, Gateway’s senior VP/chief financial officer. “We believe it would be inappropriate to issue results in advance of receiving that guidance.”

Early in April, Gateway and Microsoft announced a $150 million agreement to work together on the marketing and development of Gateway personal computing products and to resolve legal issues between the two companies.

As part of the agreement, Microsoft agreed to provide funds that Gateway is required to use for marketing and promotional initiatives as well as research, development and testing of new Gateway products that can run current Microsoft products and Microsoft’s next-generation operating system and productivity software.

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