Gateway Inc posted second-quarter earnings that edged out expectations as revenue rose 18.1% on increased unit shipments. The PC vendor reported net income up 46.9% at $89.2m, or $0.56 per share, on revenue of $1.91bn. Analysts surveyed by First Call were expecting $0.55 in earnings for the quarter. The solid results were fueled by growth in the consumer PC business and continued strength in the company’s Asia-Pacific operations.
Gateway shipped just over one million units in the quarter, a 36% increase from the year-ago period. The US consumer segment posted a 46% unit increase and saw revenue up 25%, while the US business segment had 30% unit growth and a 12% growth in revenue to $878m. The Asia business had unit volume growth of 77% and revenue growth of 58%. Europe had slight unit growth but saw revenue decrease by 14% year-over-year. Average unit price was $1,905 for the quarter, a 13% dip from the year-ago quarter and a 2% decline sequentially. Gross margins stood at 22% of revenue, up from 20.6% a year ago.
The company also enjoyed more diverse revenue streams, as non-PC revenue exceeded 10% for the quarter – a level that Gateway had hoped to achieve by the end of the year, but arrived at six months early. Growth at Gateway.net, the company’s ISP, was largely responsible, as subscribers doubled during the quarter to over 400,000. For the six-month period, net income rose 38.2% to $188.8m on revenue up 20% at $3.14bn, while EPS climbed 37.2% to $1.18. Unit shipments rose 39% for the half.
