Retail Store Closures Hit Gateway-eMachines With Big Loss


Gateway reported a sharper loss, as its merger with eMachines continued to eat into profits.

Most of the losses were attributed to the shuttering of 188 Gateway retail outlets, the firm announced, as it also reported that 622 Best Buy stores will be selling its notebook PCs at the end of the month.

The firm issued its second-quarter financial report after the close of market Thursday, announcing that it lost $339 million on $838 million in revenue, compared with a $73 million loss in the like quarter last year.

The firm's figures showed a dramatic decrease in headcount for the merged company, now below 2,000, compared with about 8,500 a year ago.

"The company continues to make good progress in lowering its cost structure, which is reflected in sharply lower selling, general and administrative [SG&A] costs before restructuring, transformation and integration costs," said Gateway president and chief executive officer Wayne Inouye in a statement. "Costs are expected to continue to trend lower, as further measures are implemented to improve efficiency in such areas as IT, operations, and staff functions."

Inouye added that the firm was committed to achieve an SG&A level below 10 percent of revenue by the end of the year.

Gateway said it sold nearly 800,000 PC units in the quarter, representing an increase of 62 percent over the previous year's level. The average price per PC was $827 versus $1006 in the quarter earlier.

Inouye said Gateway brand products are being positioned in the premium category, while eMachines PCs will remain more "value-oriented."

*This story courtesy of Techweb.com.