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Bear Stearns frets over Gateway 1Q

Shares of Gateway Inc. (NYSE: GTW) slipped Friday after Bear Stearns cut its revenue and earnings forecasts for the computer maker following talks with Gateway management.

Gateway was off 1 to 54 after Bear Stearns raised a few concerns about the company's first quarter.

Bear Stearns analyst Andrew Neff, in a research note to clients after talks with Gateway executives, said the company could miss revenue expectations for the first quarter of $2.45 billion by $100 million to $150 million.

Although Gateway is still comfortable with its guidance of first-quarter earnings per share of 41 cents, the risk of missing that figure has increased, Neff said. He cut his first-quarter earnings estimate to 39 cents a share from 40 cents, and cut his second-quarter estimate to 34 cents from 35 cents.

If Neff's earnings estimates are right, it would be the second consecutive quarter Gateway had to lower projections. The company hit estimates in its fourth quarter, but only after issuing a profit warning.

Overall for fiscal 2000, Neff lowered his per share earnings estimate to $1.80 from $1.82. He cut his 2001 estimate to $2.25 per share from $2.30

He said Gateway's "buy" rating was being maintained, particularly in light of the share price weakness. The stock may turn out to be more of a second-half story as investors wait for management to deliver more consistent results, Neff said.

Gateway has been diversifying from its core PC business by offering web hosting and other services.

Reuters contributed to this report. >