Earnings Reports for Jan. 11

Gateway’s Earnings Fall Far Short of Forecasts

Gateway Inc., the No. 2 direct seller of personal computers, reported fourth-quarter results today that badly missed diminished expectations, and also forecast 2001 sales growth of just 3 percent, prompting it to trim its workforce by 10 percent and record a charge.

The surprise earnings report, which came a week earlier than scheduled, is the latest sign of just how precipitously the worldwide PC market has slowed amid flagging economic growth in the United States and across the globe.

Gateway said that excluding a previously announced $187 million pretax charge for a write-down on the company's investments, it had fourth-quarter earnings of $37.6 million, or 12 cents a share. By comparison, in the year-ago period Gateway had net income $126 million, or 38 cents.

On that basis, the results were far below the 37 cents a share consensus forecast analysts had expected, according to First Call.

Sales fell 6.9 percent to $2.37 billion from $2.55 billion. Gateway had already warned of the sales and earnings shortfall on Nov. 29.


Koogle warned, however that “over the next year, we expect to see some short-term effects from the apparent softening economy and the continued realignment of our client base.”

After starting as a search engine in the mid-1990s, Yahoo! grew into a full-service information and shopping portal whose Web pages are visited more than 900 million times a day.

In hopes of remaining a rare Internet success story in this weakening economy and beyond, Santa Clara-based Yahoo! has been coming up with new ways to make money beyond charging for advertising, which is estimated to account for 90 percent of the company’s revenue.

Yahoo! said it has 3,700 advertisers, up from 3,450 in the third quarter, and is getting more ads from traditional companies, including 55 of the Fortune 100 businesses.

Dependence on online advertising has become increasingly risky as dot-coms and other high-tech companies have slammed the brakes on their spending, and Yahoo’s outlook seems to indicate worries about this.

Many analysts have applauded Yahoo!’s recent moves to new revenue sources, such as licensing branded corporate intranet sites.

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