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Gateway to outsource manufacturing – and leave Ireland?

Gloom and Doom

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Gateway, the hard-pressed PC maker, may stop making PCs - certainly in Europe.

According to The Irish Times, Mike Maloney, top banana at Gateway Ireland, the company is "examining the option of outsourcing all its computer manufacturing to a specialised electronics manufacturing firms".

The company also hinted that it is considering moving its European HQ from Ireland. Take out manufacturing and assembly, take out head office functions - and what do you have left of Gateway Ireland? A call-centre?

Gateway currently employs more than 900 people in Ireland. "The mood is very lethargic and everyone is unmotivated," according to an anonymous staffer quoted by the Irish Times.

The paper has obtained a memo written last week by Ted Waitt, Gateway, founder and CEO, in which he said:

"Some people will question our viability because we are shrinking or eliminating revenue in certain segments. I say that unless we get smaller first, unless we stop doing certain things, we'll never get a chance to succeed in the areas that will be critical in the future."

Gateway's PC penetration is strongest in the home sector, bombed in the US and in Europe. The company tripped up badly last year, under the leadership of Jeffrey Weitzen. The company seemed to forget that it was in the business of making and flogging PCs, boasting instead of its marvellous services business. THe company failed to cut prices in line with the market and sales plummeted. That sealed the demise of Weitzen and the return of Waitt.

Gateway may be turning into the incredible shrinking company, but it is not a serious candidate for takeover - unless Waitt, the majority shareholder, gets tired or bored with managing decline.. ®

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