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Stock Analyst Update

Gateway Preannounces Revenue Shortfall, Gets the Shaft from Intel

Gateway's warning of a revenue shortfall couldn't have come at a worse time with the holidays having just passed, but the news should not affect the company's long-term outlook.

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Gateway's (GTW) warning of a revenue shortfall couldn't have come at a worse time with the holidays having just passed. But the news should not affect the company's long-term outlook.

Late Wednesday afternoon, Gateway announced that fourth-quarter revenues will fall significantly short of expectations, owing to a shortage of key personal-computer components. The company stated that sales would come in at $2.45 billion, an increase of only about 6% over the fourth quarter of 1998. Additionally, Gateway also warned that fourth quarter earnings would come in at about 15% below expectations. Demand was extremely strong for Gateway PCs throughout the holiday season, as illustrated by heavy volume in the company's call centers and on its Web site. Unfortunately, Gateway was unable to fill orders for PCs within the much-demanded $999-to-$1,299 price range because of an inadequate supply of microprocessors and motherboards.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.