The term implies a threshold leading somewhere. Unfortunately, in the case of PC maker Gateway
Yesterday, the company released "preliminary" results for the first quarter. (The reason for the qualifier is due to certain tax implications and financial settlement negotiations, so this report is subject to change.) Including various charges related to restructuring and transformation issues, and a tax benefit, the company lost $0.49 per share, or $166 million. Backing those elements out, Gateway saw a loss of $0.22 per share, or $75 million. These results compare to a loss of $0.62 per share (which includes charges), or $200 million, in the prior year.
Net sales for the quarter, which included the eMachines merger, came in at $868 million, compared to last year's haul of $844 million in the same period -- a paltry increase. Gateway continues to find difficulty in growing its business, and is struggling mightily to hoist itself to a profitable base.
All of the restructuring and transformation expenses do nothing to warm the heart of a retail investor (not that they necessarily brighten an institutional trader's day, either). With the new round of layoffs (incremental to the previous employee cuts generated by the closure of the company's bricks-and-mortar unit) pegged at another 1,500 positions, the status of the PC maker seems to be quite grim. Gateway has attempted to diversify its offerings into other areas such as digital cameras and plasma televisions. This is a logical maneuver, since the company doesn't seem up to the challenge of fending off foes such as Hewlett-Packard
There's just no getting around the fact that the Gateway brand is tarnished. What the company could use is a brilliantly executed marketing attack through the media, better than whatever it is doing now. (I'm sure the company still advertises on TV, but I cannot recall any standout spots in the recent past.) The company has been a potential cash-per-share play at times, as AppleComputer
The bovine-themed boxes used to be winsome; alas, they're a bit more depressing these days. What the future will bring is anybody's guess, but this is one cow pasture I'd be afraid to tread in for the time being.
Gateway competitor Dell Computer is one of David Gardner's recommendations for Motley Fool Stock Advisor . Check the newsletter out for six months, risk-free.
Fool contributor Steven Mallas owns none of the above-mentioned companies.