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Gateway Posts $8.6M Q1 Net Loss

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 yesterday.

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 to 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 then the fourth quarter of 2006.

“We accomplished much in the first quarter, even as many of the challenges facing the company remain evident,” said Ed Coleman, Gateway’s CEO. “We narrowed operating and net losses from last year and increased U.S. market share sequentially, while at the same time making significant improvements to our expense structure.”