Tech News - Gateway Shares Fall Amid Plans for Restructuring

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Gateway Shares Fall Amid Plans for Restructuring

01/06/2003

NEW YORK (Reuters) - Shares of Gateway Inc. fell on Monday as investors prepared for another restructuring from the personal computer maker, whose losses have mounted due to price competition and dwindling market share.

Poway, California-based Gateway is looking closely at its 272 retail stores and may close some, Gateway spokesman Brad Shaw said, adding that the stores remain a critical part of its strategy.

"We do have a number of store leases that are expiring this year and we will take advantage of that to optimize the network," Shaw said.

"In some cases we'll consider relocating or closing certain stores but we're going to take a close look at each store's P&L (profit and loss) performance and future potential and take action accordingly," he said.

In addition, the company will announce this week a restructuring of its operations that will include making some new "senior level" appointments, Shaw said.

Gateway shares fell 4.6 percent, or 16 cents, to close at $3.30 on the New York Stock Exchange.

Gateway has booked quarter after quarter of losses as it has tried to compete with low prices from No. 1 PC maker Dell Computer Corp. amid weak demand. It reports results the week after next and is expected to post a fourth-quarter loss of 14 cents per share, and a loss of 68 cents for the year.

Chief Executive Ted Waitt warned during an investor conference in early December that the company's fourth-quarter results would come in at the low end of expectations.

Gateway's turnaround hinges on returning its focus to doing what it does best, according to one Wall Street analyst.

"What Gateway needs to do is go back to its roots," Needham & Co. analyst Charles Wolf said. The company needs to use the stores as they were envisioned when they were started in 1996 -- as places to buy low-priced PCs where customers could get great service, he said.

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