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Gateway 4Q earnings meet expectations

The fourth quarter profits of Gateway (NYSE: GTW) came in where the company predicted.

After market close Thursday, the computer company reported fourth quarter net income of $139.3 milion, or 42 cents per share, excluding one-time costs. That was in line with the company's earlier warning and consensus estimates.

Including a charge of $26 million related to an ISP deal with America Online (NYSE: AOL), Gateway earned $126 million, or 38 cents per share.

Shares of Gateway slid to 57 5/8 in afterhours activity. The stock closed Thursday's regular trading at 61, up 3 1/2 for the session.

Fourth quarter revenue increased 6.3 percent to $2.45 billion from $2.3 billion in the year ago period. Shipments of 1.36 billion units represented an 18.3 percent rise, but the company saw supply problems and a slowdown for business-to-business sales that Gateway blamed on Y2K concerns.

Gross margins rose to 22.3 percent from 21.6 percent in year-ago period. Average unit prices for Gateway increased to $1,801.

Gateway reported full year earnings of $427.9 million, or $1.32 per share, on revenue of $8.6 billion. "We came a long way in 1999 and built the foundation for a bright future," said Jeff Weitzen, president and CEO.

First Call's survey of 22 analysts currently predicts a Gateway profit of 41 cents in the first quarter and $1.82 per share for the full year 2000. The company is comfortable with consensus estimates, Weitzen said.

"So far this quarter, call volume and traffic to our Web site and stores remains strong, our business fundamentals are sound and our beyond-the-box strategy positions us extremely well for the future," he said.

Among 25 analysts polled by Zack's Investment Research, 13 recommend Gateway with "strong buy" ratings, nine maintain the equivalent of "moderate buy" on the stock, and three have "hold" advisories.>