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Gateway Q3 Sales Decrease 20%

Poway, Calif. – Despite a 13 percent rise in sequential third quarter sales of PCs and an 8 percent notebook PC sales hike over the third quarter of last year, Gateway’s overall sales for this period at hit $1.1 billion.

This was down about 20 percent from $1.4 billion in the same three months last year. Gateway, however, did substantially reduce its loss for the third quarter, reaching $49.7 million, down from a net loss of $519.7 million in the year-ago period.

During the third quarter, ended Sept. 30, the computer maker sold 729,000 units, a 12 percent increase sequentially and a 19 percent decrease year over year. On a comp basis, the company experienced an 11 percent decrease in unit sales year-on-year. Gateway attributed the sequential increase primarily to its value pricing and marketing strategy adopted in the first quarter of this year, seasonal sales trends and its redesigned product line.

Average unit price decreased to $1,533 in the third quarter, down from $1,544 in the second quarter.

Gross margin in the third quarter climbed 70 basis points, to 15 percent, up from 14.3 percent in the previous quarter. Selling, general and administrative expenses improved 190 basis points in the third quarter, to 22.2 percent, compared with 24.1 percent in the second quarter.

For the nine months, sales dropped to $3.1 billion, down from $5 billion in the same period last year. Net loss for the nine months was reduced to $228.5 million, down from a net loss of $1 billion in the same nine months in 2001.

Looking ahead, Gateway said it expects market conditions to remain challenging for the remainder of the year. Despite this, the company expects revenue for the fourth quarter to rise sequentially. Gross margin percentages are expected to improve sequentially.

For the full year, Gateway is revising is revenue guidance to a range of $4.3 billion to $4.5 billion, and a pre-tax loss, excluding special charges, ranging from about $310 million to $330 million.