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Gateway profit falls – don't have a cow, man

Promise of jam tomorrow once AOL deal beds down

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Gateway saw profits fall but still managed to meet revised (downward) forecasts for Q4. The direct PC vendor, set up by the son of a cattle farmer, posted pre-tax profit at $126 million, down five per cent on the previous year. Excluding charges connected to its deal with AOL in October, Gateway clocked up earnings of $139 million. This was on sales of $2.45 billion for the last three months of 1999. Figures were in line with forecasts, and followed the company's profit warning earlier this month. At the time it cited supply problems with Intel chips and a slowdown in spending due to Y2K. Unit shipments increased 18 per cent for the quarter to 1.36 million. Full year pre-tax profits were £428 million on sales of $8.6 billion. Gateway said it expected to reap financial rewards in 2000 from its Internet agreement with AOL – which saw the ISP take over Gateway's online service gateway.net. It signed up 400,000 new users to the service in the fourth quarter – double that of the previous quarter and taking its total subscribers to one million. ® Related stories: Gateway to use AMD because of Intel chip famine

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