Gateway faces new accounting probe

The investigation by the U.S. Attorney's Office relates to the same time period and subject matter as the SEC's ongoing probe of the PC maker's 2000 financial reports.

John G. Spooner
John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
Gateway disclosed in its quarterly report Wednesday that the U.S. Attorney's Office has begun an investigation into the PC maker's accounting.

The preliminary inquiry into the company's fiscal year 2000 financial reports relates to the same time period and subject matter as an ongoing probe by the U.S. Securities and Exchange Commission, Gateway said.

A company representative confirmed the investigation by the U.S. Attorney's Office for the Southern District of California in San Diego. While Gateway cannot predict how quickly it will be resolved, the company is cooperating to ensure it is wrapped up as soon as possible, the representative added.

The investigation comes at a difficult time for the Poway, Calif., company. After a string of quarterly losses, Gateway has been working to reinvent itself. The company's newest strategy is designed to transform it from an unprofitable purveyor of PCs into a brand-name seller of computers and electronic devices that all work together.

It's not clear how Gateway will be affected by the investigations. The PC maker twice has restated earnings for various portions of its fiscal year 2000--first in February 2001 and again last month. The restatement in April reduced its 2000 profit by $2.9 million and increased its 2001 profit by the same amount.

Meanwhile, Gateway said in the quarterly report that it believes the resolutions of the investigations will not negatively affect its operating results and cash flows.