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Gateway reveals accounting probe

PC vendor Gateway has been under investigation by the US Securities and Exchange Commission (SEC) since December 2000, the company revealed last week.

Gateway said it had voluntarily restated its year 2000 earnings in February 2001 and is co-operating with the SEC regarding its year 2000 financial reports. The investigation is to be completed by the end of 2002 or the first quarter of 2003.

"Because we recently determined that we expect the SEC to complete the investigation this quarter or next quarter, we've chosen to disclose it. Under applicable disclosure rules, we determined we weren't previously required to disclose the inquiry," said a Gateway spokesman.

The spokesman would not comment on whether the SEC was investigating certain aspects of the company's year 2000 financial reports, or the February 2001 restatement itself.

The February 2001 restatement of earnings concerned the implementation of accounting rules regarding the classification of freight charges and revenue recognition. Full-year revenue for 2000 was lowered by about $53m (£33.5m) as a result of the change.

Gateway founder, chairman and chief executive officer, Ted Waitt, reassumed his position in January 2001, two years after giving up the post and about a month before the company issued the restatement. The day after he took charge, three of the top eight executives at Gateway were fired.

The spokesman would not comment on whether the investigation is aimed at the company, or individuals. "The investigation is not complete and no claims have been made against anyone," he said.

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