Revenue slipped to $1.02 billion from $1.12 billion, missing Wall Street's average forecast of $1.05 billion, as compiled by Reuters Estimates. Earnings per share of 2 cents matched the average of their forecasts.
Fourth-quarter net income was $8.8 million, compared with a net loss of $20.9 million, or 5 cents per share, a year earlier, the company said in a preliminary earnings report.
benefited from an $11.8 million net tax gain in the quarter. It also received $8.6 million from a .
Gateway, based in Irvine, California, said fourth-quarter profitability was hurt by supply constraints, but it forecast "improved financial performance" in 2007.
Consumers delayedoperating system, Chief Executive Ed Coleman said.
"We essentially got through this pre-Vista period, and we're in a position to benefit from Vista" in the first quarter, Coleman said in an interview.
Gateway shipped 5 percent fewer units than in the year-earlier period, giving it an estimated 6.6 percent share of a U.S. market dominated by rivals Hewlett-Packard and.
The company characterized the results as preliminary, as it was still completing its year-end balance sheet. Gateway said it is "evaluating the effectiveness of its internal controls" related to "inventory receipt discrepancies" that may result in balance sheet adjustments to inventory and liability-related accounts.
Gateway's gross profit margin sank to 5.2 percent in the fourth quarter from 6.2 percent a year earlier, as profitability declined in the company's retail business.
Gateway is expanding in retail sales of its computers, a business that typically has lower profit margins than Gateway's professional and direct-sales segments.
Shares of Gateway fell to $2.02 in extended trading following the earnings report after closing up 2.4 percent at $2.15 in regular-session New York Stock Exchange trading.