Gateway to cut another 1,500 jobs

Gateway Inc. plans to reduce its headcount by another 1,500 people, or about 40 per cent of its staff, in a continued effort to streamline the company and return to profitability.

The company reported a narrower preliminary first-quarter loss of US$166 million, compared with US$200 million in the year-earlier period, according to a company statement. First-quarter revenue was up to US$868 million from US$844 million a year earlier, helped by the acquisition of low-cost PC maker eMachines Inc., which was completed on March 12.

As it continues a process of simplifying its organization, Gateway said it plans to further reduce its ranks from about 3,500 employees now to about 2,000 by the end of the year. The announcement of the job cuts followed the closure of Gateway’s 188 retail stores in April. That action resulted in 2,500 job cuts.

The additional cuts should not affect customer service, a Gateway spokesman said.

Gateway has been struggling for the last few years against larger rivals including Dell Inc. and Hewlett-Packard Co. The company is betting on an increased presence in the retail channel, a higher level of efficiency and new products such as flat-screen TVs to turn its business around.

As part of its restructuring efforts, Gateway said it also plans to move into a new, consolidated head office in Orange County, Calif., later this year. EMachines operations will move there from their current headquarters in Irvine, Calif., also in Orange County. Gateway’s current main office is in Poway, Calif., about 80 miles from Irvine.

Gateway sold 604,000 PCs in the first quarter, up 19 per cent year-on-year, largely due to the eMachines acquisition. Gateway products are sold primarily in the U.S., with some sales in Canada and Mexico. EMachines sells its products in North America as well as in the U.K. and Japan. EMachines is also expanding elsewhere in Europe, the spokesman said.

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