Posted on 03/02/2004 4:48:23 PM PST by yonif
The downsizing at beleaguered Gateway Inc. continues, but today's headlines regarding a new round of layoffs are in error, a company representative said today. "Bloomberg reported it erroneously as being something new," said spokesman Bob Sherbin. "There is really nothing new; it's part of the restructuring that we talked about in the third quarter."
The reports from Bloomberg and other news services were based on comments by Gateway's Chief Financial Officer Roderick Sherwood during a presentation at the Morgan Stanley Semiconductor and Systems Conference yesterday.
Sherwood said the Poway-based company had cut about 1,000 jobs so far this year and will cut another 1,000 in the next few months as part of an "ongoing evolution of outsourcing started in Q3 and Q4" of 2003.
Added Sherbin: "It is part of the leftover restructuring that wasn't done in the fourth quarter and will be done in the first half of this year. We said at the time that it would take nine months."
The personal computer cum consumer electronics company announced its latest corporate restructuring in September with the closure of its Virginia manufacturing facility and layoff of more than 400 people. Company officials said then that more jobs would be cut, including at the South Dakota manufacturing facilities in North Sioux City and Sioux Falls, but they were not specific about how deep the cuts would go.
Gateway, which has not made a profit in three years, is looking for annual cost savings of up to $115 million to $130 million a year.
At the end of 2003, the company had about 7,400 employees and currently has about 6,500, Sherbin said. In the next few months, the headcount will drop to about 5,500.
Numerically, most of the layoffs are outside the San Diego area, Sherbin said. Gateway has about 550 to 600 employees locally.
The cuts are mainly in administration, service, support and operations, he added.
Meanwhile, the acquisition of eMachines may be completed as early as next Monday, which is sooner than originally expected when the takeover was announced Jan. 30.
As part of the deal, eMachines as a company will disappear, but the eMachines brand will be retained, giving Gateway a broader product line and more sales channels.
In addition, Gateway founder, chairman and chief executive Ted Waitt will turn over the company's day-to-day control to eMachines CEO Wayne Inouye. Waitt will remain as Gateway chairman.
There may be more management changes as well, Sherbin said, although the specifics are unknown at this time.
As for layoffs in relation to the eMachines deal, the company, in a statement, said that "no decisions have yet been made regarding possible headcount impacts."
In January, Gateway reported a fourth-quarter net loss of $114.1 million, or 35 cents a share, compared to a year-earlier net loss of $72 million, or 22 cents a share.
Gateway shares (NYSE: GTW) fell 2 cents, or less than 1 percent, to close at $5.79 today in active trading. The firm has a market cap of $1.88 billion.
A year ago, the stock was trading just above $2 a share.
Company officials said then that more jobs would be cut, including at the South Dakota manufacturing facilities in North Sioux City and Sioux Falls, but they were not specific about how deep the cuts would go.
In other words,
We're shrinking our way into greatness!
Why not shrink to 0? Save a TON of money!!
Its called a 'death spiral', best to avoid for investors. They can't think they're way out of it so they're gonna shrink their way out.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.