Gateway 2002 sales at low-end of forecasts

Takes on Apple with Profile 4

Gateway's sales for 2002 will probably be at the low end of previously published company forecasts of $4.5bn-$5bn, CFO Joe Burke told Bloomberg last week.

The pan-US PC maker pulled in $2bn in sales for the first half the year, which means that it is forecasting $2.5bn for the second half. On first half performance, that should not present too many problems - the PC industry always does better in the second half of the year, especially PC makers such as Gateway which target the consumer sector.

But is Gateway still being too optimistic? According to the Thomson/First Call round-up, analyst CY2002 revenue consensus figures are $4.45bn, a trifling $50m less than Gateway's new low-end projection. But if there are any industry road accidents this year, you can be sure that Gateway will be involved.

At its peak, Gateway was a $10bn-plus t/o almost-global company. The PC maker last year retired from lossmaking overseas territories to concentrate on its lossmaking home territory. It has been busily re-organising, and has two big safety cushions which should see it through to profitability.

First, founder and CEO Ted Waitt owns 30 per cent of the firm, and he ain't going anywhere. And second, Gateway has a billion dollars or so in cash and marketable securities.

High Profile

Last week, Gateway unveiled a hip new PC, the all-in-one Profile 4. The line-up feature five models, all with LCD monitors and prices ranging from $999 to $1,999. The Profile 4 is pitched squarely against the design conscious kind of punters who would normally buy an iMac, and Gateway is dipping deep into its Intel and Microsoft co-op marketing funds to hammer the message home with US consumers.

The company has commissioned eTesting Labs, the benchmarking wing of Ziff Davis, to run slide rules over the performance of the two beasts. Armed with the highly favourable results - to the Wintel box - Gateway is girding its marketing loins.

The PC maker is running TV ads in September with the tagline: "Did we mention the Gateway Profile 4 costs less than the iMac?" It says the ads will reach 83 per cent of US consumers an average of 14 times during September, in that comically precise way beloved of media buyers.

In print magazine ads, Gateway will exhort consumers and businesses to directly compare the Gateway Profile 4 and iMac computers, Here the headline is: "It's a close contest. Until you turn them on."

Gateway is also running head-to-head ads on the Web but isn't saying what the tag-line. Considering the relative size of the spend between online and TV, it's likely that the company or its PR agency simply forgot to publish this detail. ®

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