April 2, 200422 yr Gateway news Gateway to close all stores, fire 2,500 Fri Apr 2, 7:54 AM ET Add Business - USATODAY.com to My Yahoo! By Michelle Kessler, USA TODAY Struggling PC maker Gateway (GTW) said Thursday that it plans to close all 188 of its retail stores and lay off 2,500 workers. The stores will close April 9, Gateway says. Its computers will still be sold on Gateway's Web site and via phone. "We're looking for any way we can to reduce our operating costs," says spokesman Brad Williams. Gateway plans to provide more details when it announces first-quarter earnings April 29. Gateway was the only major PC maker to run its own stores. That made it hard to compete with rivals, which didn't have the high cost of store employees and real estate. Gateway's overhead on PCs was often twice as high as rival Dell's, which sells mainly via phone and Internet, says Gartner Group analyst Martin Reynolds. "The stores were an albatross around Gateway's neck," says U.S. Bancorp Piper Jaffray analyst Ashok Kumar. Gateway has tried several times to remake itself since 2000. Attempts to boost sales by remodeling stores and adding more consumer electronics products failed. Gateway's shares rose 23 cents, or 4%, to $5.63 in after-hours trading on the news, released after the market closed. "This should get Gateway back in fighting shape," says independent technology analyst Rob Enderle. The closures were an expected part of Gateway's latest big restructuring. Gateway, the No. 5 U.S. PC maker, announced plans to acquire No. 4 eMachines earlier this year. The merged company looks more like eMachines than Gateway. EMachines CEO Wayne Inouye has replaced Gateway CEO Ted Waitt, who remains chairman. The merged company is moving to Irvine, Calif., near eMachines' current headquarters. (Gateway is based in Poway, Calif., about 80 miles away.) EMachines sells mostly through third-party retail stores, such as Best Buy and Costco, which is cheaper than running its own. The method also shows off products to customers who are passing through to buy other products. Although Gateway has not announced plans to sell PCs alongside eMachines', analysts who cover the industry expect that to happen any day. That would increase competition on store shelves, likely lowering prices, Gartner's Reynolds says.
April 3, 200422 yr Doesn't surprise me a bit. Their products suck. It's not so much that -- crappy Intel cheap iron is crappy Intel cheap iron no matter who's logo is on the box. They just got away from a business formula they knew and understood when they branched out from online direct sales and started sinking resources into the stores. Dell, on the other hand, saw what Gateway did successfully and improved on it when they started getting serious about direct sales.
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