Harbinger Buys Gateway Stake
Monday August 21, 12:28 pm ET
Harbinger Capital Buys 10.2 Percent Stake in Gateway, Hires Firebrand to "Unlock Value"
NEW YORK (AP) -- An investor group led by Harbinger Capital Partners agreed to buy 37.8 million shares, or a 10.2 percent interest in Irvine, Calif.-based computer maker Gateway Inc., according to a filing on Monday with the Securities and Exchange Commission.
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As part of the deal, Harbinger hired Firebrand Partners LLC, a New York City activist investment firm, to "unlock value" at Gateway. Under the arrangement, Harbinger will pay Firebrand 10 percent of net profits on its investment, according to the SEC document.
Also in a letter filed with the SEC, Scott Galloway, founder and CIO of Firebrand Partners, requested a meeting with Gateway's interim chief executive Richard Snyder to discuss ways to "drive the business and build value" at the company. Galloway was also founder of online gift retailer RedEnvelope Inc. in 1997.
Earlier this month Gateway reported a second-quarter loss on deteriorating gross margins and sluggish sales growth, partly due to a weak PC market. The company's loss for the quarter was $7.7 million, or 2 cents per share, down from profit of $17.2 million, or 5 cents per share, for the same period last year.
Shares of Gateway were up 5 cents, or 3.4 percent, to $1.50 in midday trading on the New York Stock Exchange. |
