Gateway "confident" despite brokerage downgrade

The PC maker reiterates that it is comfortable with previous Wall Street expectations for the fourth quarter.

2 min read
Following a downgrade by brokerage firm Wit SoundView on Monday, PC maker Gateway reiterated that it is comfortable with previous Wall Street expectations for the fourth quarter.

"Based on current growth rates, we are confident that our sales of PCs--as well as sales of products and services other than the PC, such as training, Internet service, software and peripherals--are ramping at expected levels," Gateway chief financial officer John Todd said in a statement.

"We remain comfortable with consensus (earnings per share) estimates and guidance on revenue for the fourth quarter and full-year 2000."

Wit SoundView cut its rating on the direct computer seller to "hold" from "buy" on Monday, at the same time chopping Dell Computer and Apple Computer to "buy" from "strong buy."

"Our recent checks suggest that U.S. consumer PC sales continued to weaken in October and the first part of November," Jason Wells, an analyst at Wit SoundView, wrote in a research note.

"While the pricing environment appears benign so far this quarter, we are concerned that vendors will begin cutting prices to jumpstart what so far has been soft demand. With this backdrop, we believe Gateway shares will have trouble getting out of the starting blocks this holiday season, considering that the company derives well over 50 percent of revenues from the U.S. consumer market."

In October, Gateway reported third-quarter results that matched Wall Street expectations and predicted that fourth-quarter results would also meet forecasts.

Gateway is expected to earn 62 cents per share in the fourth quarter, according to a consensus of analysts polled by First Call/Thomson Financial.