Thu, Mar 08, 2001 EST
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Gateway Warns on Earnings
By Ben Fox   Associated Press
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CORONADO, Calif. — Gateway Inc. on Wednesday sharply cut its earnings projections for the first half of the year and pledged a renewed focus on its core business of selling personal computers to home users.

Gateway said it would break even before charges in the first six months of 2001, far below analyst expectations of a profit of 17 cents a share, according to First Call/Thomson.

The company, which held its annual analyst meeting in Coronado, also said it would take charges of between $150 million and $275 million in the first quarter to cover previously announced job cuts and other items.

Gateway's announcement comes on the heels of a barrage of earnings warnings from manufacturers in the technology sector, including competitor Dell Computer Corp.

In outlining plans to refocus the company amid an industrywide slump, Gateway President and CEO Ted Waitt said the company will sharply reduce its product line, improve customer service and concentrate on its core business of producing and selling computers.

Company officials said Gateway is "re-evaluating" its approximately 300 sales kiosks in OfficeMax stores and scrutinizing operations at 384 Country Stores.

The company didn't announce plans to close the stores, but won't add any new ones. "We probably have enough stores," said Bart Brown, senior vice president of the consumer division.

Analysts said they expect the company will continue to struggle this year, but were encouraged by the steps announced during the daylong meeting at a hotel in Coronado.

Gateway, the fourth-largest PC seller in the country with about 15 percent of the market, lost $94.3 million, or 29 cents per share on revenues of $2.37 billion in its most recent quarter. Excluding a charge related to its investments in technology companies, Gateway earned $37.6 million, or 12 cents per share.

The company announced in January it would lay off 10 percent of its work force, or about 3,000 people.

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