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Gateway Q1 Revenue Dives

Poway, Calif. – Gateway’s first-quarter sales were cut in half, compared with the same three months in 2001, with revenue sliding to $992.2 million, down from $2 billion.

Gateway nearly doubled its net loss for the first quarter, ended March 31, hitting $123.2 million, compared with a loss of $62 million in the first quarter last year. The current loss includes pre-tax effects of $99 million of special charges.

During the first quarter, Gateway sold 645,000 PCs in the United States, down 30 percent from the same three months in 2001, but off only 5 percent from the fourth quarter of last year. Average unit price decreased to $1,538, compared with $1,667 in the fourth quarter of last year.

Sales of non-PC products and services in the first quarter were 18 percent of revenue and 49 percent of gross margin dollars.

Overall gross margin for the quarter dropped 860 basis points, down to 12.6 percent from 21.2 percent in the previous quarter. Gross margin for the first quarter, excluding special charges, was 14.1 percent.

Selling, general and administrative (SG&A) expenses in the first quarter climbed to $338 million, compared with $240 million in the previous quarter, due primarily to special charges of $83 million recorded in the three months.

Looking ahead, Gateway expects revenue for the second quarter to be relatively flat, compared with the first quarter of 2002. Sequential quarterly improvement is expected in terms of SG&A expenses, which is targeted to decline to a level comparable to the fourth quarter of 2001.