updated 4/28/2005 7:59:55 PM ET 2005-04-28T23:59:55

Gateway Inc. posted a sharply narrower first-quarter loss Thursday, another sign that massive job cuts and store closures are sparking a turnaround.

The personal computer company lost $5.2 million, or 1 cent a share, compared to a loss of $171.5 million, or 51 cents a share, the same period last year. The latest period included a restructuring charge of $8 million, largely for costs associated with the store closures and job cuts. The 2004 period included a restructuring charge of $104 million and a tax benefit of $13 million.

Excluding the restructuring charge, Irvine-based Gateway posted a profit of 1 cent a share in the latest period, compared to an estimated loss of 1 cent a share among analysts polled by Thomson Financial.

Revenue fell 3.5 percent to $837.8 million from $868.4 million, hurt by the closure of the company's 188 U.S. stores in April 2004 and a retrenchment in consumer electronics. The sales decline was partially offset by the acquisition of eMachines Inc. in March 2004. Gateway said it sold 941,000 PCs during the quarter, up 56 percent from last year.

Chief Executive Wayne Inouye called Gateway "a company positioned for sustainable growth and sustainable profits."

"I really believe we're on the right track," he told analysts during a conference call.

Rod Sherwood, chief financial officer, told analysts that Gateway would no longer provide quarterly estimates of its financial performance. He reaffirmed previous estimates that the company will post revenue between $4 billion and $4.25 billion in 2005 and a profit between 15 cents and 17 cents a share. The full-year profit estimate includes a restructuring charge of 2 cents a share.

Inouye, a holdover from eMachines and a former executive at Best Buy Co. Inc., moved quickly to slash costs after taking over from Gateway co-founder and chairman Ted Waitt in March 2004. The company ended last year with 1,900 employees, down from 7,400 at the end of 2003 and about 24,600 in 2000.

Gateway said it had $584 million in cash and marketable securities at the end of March, down from $644 million at the end of 2004.

Gateway shares rose 3 cents to close at $3.48 Thursday on the New York Stock Exchange, before the earnings report was released. They added 10 cents, or 2.9 percent, to $3.58 in after-hours trading.

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