Gateway Announces Major Layoffs
Struggling personal computer maker Gateway announced Tuesday it is laying off about 25 percent of its global workforce as it tries to cope with an increasingly bleak market.
About 15 percent of the company's U.S. workforce will be cut under the plan, which the company said will help it save $300 million.
The company will also take a $475 million third-quarter charge, and close its company-owned operations in Japan, Australia, and other Pacific Rim nations.
Gateway, which has been hit by a fierce price war led by rival Dell Computer Corp., said it may pull out of Europe as well. The third-quarter charges include about $200 million for the possible exit from Europe.
Gateway, America's fourth-largest computer maker, has a work force of about 19,000.
About 5,000 of Gateway's employees will lose their jobs worldwide, said Brad Shaw, a company spokesman.
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The company said it would close customer service and sales centers in Hampton, Va.; Vermillion, S.D.; Salt Lake City; and Lake Forest, Calif.
"As tough as these decisions were to make, we're doing all the right things to create a new company with a unique competitive edge and a healthy, profitable future," said Waitt, Gateway's chairman and CEO. "We're planning to win by building a lean, nimble organization that is unified and focused on our customer base unlike any other time in our history."
The company said it will immediately close all of its company-owned operations in Malaysia, Singapore, Japan, Australia and New Zealand.
Waitt said the layoffs are part of the company's strategy to diversify its product line and return to profitability by the fourth quarter of fiscal 2001.
"We feel pretty good about the strategic steps we are taking," Waitt said.
In July, Gateway said it planned to move beyond PC sales. The company said it would aggressively market home networks, computer consulting and financing packages for consumers, schools and small businesses.
The PC indstry saw its first-ever drop in sales this year. Some analysts predict it won't recover until next year or early 2003.
Gateway, the nation's fourth-largest computer maker, focuses strongly on the U.S. computer market, leaving it vulnerable to deteriorating domestic sales.
Gateway had total global revenue of $9.6 billion in 2000.
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