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Gateway wields cost-cutting axe

2,250 jobs, 19 stores

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Gateway, is to implement deep cost cuts in its US heartland, announcing 2,250 job cuts and the closure of 19 retail stores.

The PC maker is taking a charge of $75-$100m and expects to save $100m annually from the cuts, which represent a 16 per cent reduction in headcount. This follows last year's staff reduction of 25 per cent when overseas operations were shut down. Four out of the company's 10 admin sites are to be chopped.

Gateway will still operate 277 stores in the US, after the cuts. The company had a woeful Christmas, losing market share, and failing to meet forecasts. But cost cutting has ensured that it made a - skinny - profit in the December quarter.

The company yesterday declared net income of $5.1m before non-recurring items, on sales of $1.1bn (it had forecast sales of $1.25bn). In the same period last year, sales were $2.4bn. ®

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