Shares of Gateway, , the biggest direct seller of personal computers, slipped yesterday after the company, which employs 1,600 people in Dublin, warned that sales and earnings for the fourth quarter would fall below analysts' expectations.
Gateway, late on Wednesday, cited "spotty and unreliable" supplies of microprocessors and motherboards, the brains and guts of PCs, respectively, as well as slumping demand from business customers because of the Y2K date change.
Intel, another major employer in Ireland and the world's biggest computer chipmaker, is San Diego-based Gateway's sole supplier of microprocessors, and many analysts issued notes to clients yesterday in which they all but guaranteed an announcement soon by Gateway that it would start buying chips from Intel rival Advanced Micro Devices.
In New York Stock Exchange trading, Gateway shares were down $2 (€1.94) to $60.25 after touching a low of $58.50. Investors hammered the stock in after-hours trading on Wednesday.
"Supply of key processors and motherboards was severely constrained, spotty and unreliable, particularly in our consumer sweetspot in the $999 to $1,299 (PC) price range," Mr John Todd, Gateway chief financial officer, said in a statement.
"We're in the process of fixing that issue now and will have news on that front in the very near future."
Intel's Pentium III microprocessors, running at 450 megahertz, are the chips that Gateway uses in PCs sold in the "sweetspot range" of the consumer market.
Gateway, in its sales and earnings warning, also cited a Y2K-related slowing in its government, education and big business accounts, which make up about 27 per cent of total company sales, Salomon Smith Barney analyst Mr Richard Gardner said in a note to clients.
"We see it as a one-time thing, as an industry or environment issue rather than a Gateway issue," Mr Todd said in an interview on Wednesday.
Gateway said it expected to report revenues of about $2.45 billion for the fourth quarter, a 6 per cent increase over the same period a year earlier.
It expects fourth-quarter earnings per share of about 37 cents, after adjusting for a previously announced charge related to its alliance with America Online. Gateway said this figure was seven cents below analysts' current consensus estimate.
Gateway said it remained comfortable with analysts' forecasts that it would earn 41 cents per share for the 2000 first quarter and $1.83 per share for the full year 2000.
