Gateway Faces Shortfall, Slashes Staff
Mon Mar 17, 8:36 PM ET
story.news.yahoo.com
POWAY, Calif. (Reuters) - Gateway Inc. (NYSE:GTW - news), the No. 3 U.S. personal computer maker, warned on Monday that its first-quarter results would fall far below analysts' forecasts and said it would slash its work force by 17 percent in a bid to cut annual costs by over $400 million.
Shares in Gateway were unchanged at $2.40 in after-market trade after closing up 20 cents, or 9 percent.
Gateway, in its third restructuring since 2000, said it will close 76 stores by March 24, raising the number of underperforming stores the company will have closed in its first quarter to 80, or 29 percent of its network.
The Poway, California-based company said it will cut 1,900 jobs, half of which will affect store employees.
The computer maker said the actions will cost between $75 million and $80 million, likely reflected as an operating expense in the first quarter. The cash component of the cost is expected to be about $10 million this quarter.
Gateway said its first-quarter revenue will be about $820 million to $850 million, in part reflecting a sharpened focus on higher-margin PC sales and current weak demand. Its quarterly loss per share, including restructuring costs, will range from 62 cents a share to 66 cents a share.
Analysts had on average expected a loss of 34 cents a share and revenues of $955.3 million, according to tracking service Thomson First Call.
Gateway has posted losses in eight of the last nine quarters amid a soft economy, sluggish PC sales and stiff competition with rivals Dell Computer Corp. (Nasdaq:DELL - news) and Hewlett-Packard Co. (NYSE:HPQ - news)
CEO: HOLDING CASH VALUE
Gateway, whose shares have traded below cash value, projected it will have more than $1 billion in cash and marketable securities at the end of the year. |
