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Gateway on Monday reported its first quarterly profit since 2001, but shares in the US personal computer maker fell about 11 per cent in after-hours trading as the company cut its 2005 sales and earnings forecast.

Officials said the sales forecast was cut to reflect “competitive pricing pressure” and a decision to reduce direct sales to avoid competing with retail distributors. The company blamed component costs and a 2 cents per share tax expense related to delays in settlements with authorities.

Gateway's revised forecast comes less than a week after Dell, the world's largest PC maker, reported lower than expected quarterly sales. Dell issued a weak outlook that raised fears the recent surge in PC sales growth might be slowing.

Gateway said it expected 2005 sales of $3.9bn-$4bn, down from a forecast of $4bn-$4.25bn. It predicted 2005 earnings per share, not including special items, of 13-15 cents, down from its previous 17-19 cent forecast.

Helped by an antitrust settlement payment from software maker Microsoft, Gateway reported a second-quarter net profit of $17m, or 5 cents per share, in the quarter ended June 30. That compared with a loss of $339m, or 91 cents per share, a year earlier. Revenue reached $873m, compared with $838m last year.

Not including special items, Gateway had a second-quarter profit of 3 cents per share. Analysts expect earnings of 2 cents per share on sales of $895m.

Gateway twice delayed its results to consult with the securities regulator on the accounting for the $150m settlement from Microsoft. It received $15m from Microsoft in the quarter.

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