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Gateway claws back market share

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Gateway lost a heap of money in Q1 and US shipments were down 30 per cent from the same period last year to 645,000 units. But the PC maker finds some things to cheer about a quarter which saw it make a net loss of $123m from sales of $992m.

First up, the net loss was $61m, once you strip out the special charges; second, the company set in train efficiencies expected to save it $100m a year. And it ended the quarter with $1.2bn cash and marketable securities, which is a nice security blanket.

What else? It had a very nice winter Olympics, with its 5,300 PCs and servers performing 'flawlessly' during the event. Oh, and it got some editor awards.

Then there's the good news/bad news. Gateway's gross margins tumbled from 21.2 to 12.6 per cent from Q4 to Q1. But this was anticipated the company points out, and is attributable entirely to its new value-pricing strategy, introduced in late January. And besides, strip out the special charges and gross margins, notch up a point and a half to 14.1 per cent.

Following the cut-price tactics, Gateway's market share has risen, according to Ted Waitt, CEO and chairman. The company reckons it has clawed back market share in consumer and small and medium business segments, with sales up for consumers - bucking seasonal trends, it notes - while SMB sales were flat.

Gateway reckons Q2 will be flat sequentially so far as shipments are concerned, and reckons that cost cutting will mean a slightly better performance than Q1's net loss of $0.20 a share. ®

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