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Gateway on thin ice for holidays

Chief Executive Ted Waitt warns that sales are on the light side; the computer maker may have to revise its financial estimates downward for the fourth quarter.

Computer maker Gateway is skating on thin ice this holiday season, as Chief Executive Ted Waitt warned that sales are on the light side.

Speaking at the Credit Suisse First Boston conference in Arizona, Waitt said that unless Gateway sees a significant jump in sales in the next few weeks, the company will likely have to revise its financial estimates downward, a representative said.

As it stands, the best-case scenario for Gateway is for revenue and net loss for the fourth quarter to hit the lower range of previous estimates. In October during its third-quarter conference call with analysts, the Poway, Calif.-based company said net losses would come to between 10 cents and 13 cents a share, while revenue would increase from the $1.41 billion achieved in the third quarter.

The October projections, though, represent a revision downward from previous estimates. In October, Gateway said it expected full-year revenue to be $4.3 billion to $4.5 billion, with a pretax loss of between $310 million to $330 million, excluding special charges. In July, the company had forecast full-year revenue of $4.5 billion to $5 billion and a pretax loss of $200 million to $250 million.

Other PC makers said they were pleased so far with holiday sales. HP said that post-Thanksgiving sales met expectations, while Emachines said some markets exceeded expectations, although both companies admitted that their preholiday outlook was relatively cautious.

Sales of plasma-screen TVs--a market Gateway just entered with a low-priced 42-inch model--are also strong. Gateway will likely achieve double-digit growth in the market during the quarter, the representative said.

Gateway has been one of the PC makers hit hardest by the slowdown that began in August 2000. Since then it has revamped management, closed down international operations and laid off employees.