On Feb. 8, PC maker Gateway (NYSE:GTW) released preliminary fourth-quarter earnings for the period ended Dec. 31.

  • An $11.8 million tax benefit moved the bottom line into the black with an $8.8 million net profit, but revenue dropped 9%.
  • Not satisfied with the results, CEO Ed Coleman said in the conference call that his goals are to "drive down our cost structure, improve operational execution, and reallocate our resources to concentrate on the consumer market."
  • Our Motley Fool CAPS community gives Gateway but one lonely star out of a possible five.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$1,020.5

$1,124.2

(9.2%)

Net Profit

$8.8

($20.9)

N/A

EPS

$0.02

($0.05)

N/A

Diluted Shares

372.9

409.3

(8.9%)



Get back to basics with a look at the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

5.2%

6.3%

(1.1)

Operating Margin

(0.4%)

(2.6%)

2.2

Net Margin

0.9%

(1.9%)

2.7

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$416

$586

(29.0%)



Learn the ways of the balance sheet.

Cash Flow Highlights
As management seeks to improve the company, we put in a vote to include a cash flow statement with earnings.

Find out why Fools always follow the money.

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Related Foolishness:

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