Gateway slashes workforce after poor results
Weak demand will leave swollen inventories
PC manufacturer Gateway will lay off ten per cent of its workforce globally - some 3000 people - and announced fourth quarter results well below previous estimates.
In a statement, Gateway blamed a slow down of demand for PCs and increased pricing pressures for its disappointing results
Gateway reported a loss of $94.3 million, for the quarter ending 31 December. This included a previously announced $187 million pre-tax charge to earnings related primarily to a write-down on the company's technology investments, without which Gateway would have reported net income of $37.6 million.
The firm recorded revenue of $2.37 billion for the quarter against the $2.64 billion expected by analysts.
Gateway reported full-year 2000 profits of $315.9 million on revenues of $9.7 billion, a 28 per cent decrease from 1999. It will take a charge of $50 million in its first quarter to make the job cuts.
Gateway's announcement followed a profit warning from Hewlett-Packard, which is also being affected by weak demand for PCs.
"Softer sales have caused inventories of our competitors to swell, and have touched off an aggressive pricing environment that will have negative consequences for the PC sector for the next six months," said Jeff Weitzen, Gateway's president and chief executive. ®
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