Personal computer maker Gateway 2000 Inc has warned that net income for its third quarter ending September 30 will not meet analysts’ expectations of $0.47 per share. Gateway chief Ted Waitt blames the shortfall on internal forecasts which were overly aggressive and indicated that the company is seeing rising costs and falling margins. The UPS strike, lower average unit prices and potential reserves against excess inventory will adversely affect the quarterly results. Gateway still believes that unit shipments for the quarter will be up about 30% over the corresponding period last year. Operating income for the quarter is expected to be marginal before non-cash charges stemming from the acquisition of Advanced Logic Research Inc (CI No 3,186) and a one-time write-off of investments. For the third quarter of 1996, Gateway posted net income of $60.7m, or $0.78 per share, on revenues of $1.2bn. In July, the company reported second-quarter net income of $56.5m, or $0.36 per share. Gateway shares, which dropped $2.75 on Tuesday amid rumors of the announcement, continued their slide Wednesday, shedding $3.75, or 10.3%, to close at $32.813.
