Federal law suit beckons for 'misleading' Gateway

Troubled PC-maker Gateway is being sued in a US class action suit for making misleading announcements.

The suit claims Gateway reported false and misleading financial results for the three months ending in September and failed to report the declining value of its investments in startup companies. Filed in a San Diego federal court on behalf of Gateway shareholder James Burton, the suit is asking for a class action status. A Gateway spokesman said the company denied the allegations and will defend itself vigorously. Gateway had said it expected a strong fourth quarter when it reported its third quarter results in October. But the company was hit by the declining growth of sales of PCs in the US and was obliged to issue a warning on 29 November, stating sales will be weaker than expected. At the time, Gateway's shares dropped 34 per cent to $20.30 and now stand at around $17.50.