Gateway will close its entire network of 188 retail
stores next week and lay off about 2,500 staff.
The stores will be closed on 9 April, however, it will continue
to sell products directly to customers over the web and by phone,
and will seek to expand to other retail outlets.
The move comes less than a month after Gateway completed its
acquisition of PC supplier eMachines and recruited a new chief
executive officer, Wayne Inouye.
Part of Gateway's motivation for buying eMachines was to have
access to its retail channels, which include most of the big
electronics stores in the US, said Rob Enderle, principal analyst
with The Enderle Group. Those electronics stores provide a better
outlet for Gateway to sell its products, particularly as it tries
to expand beyond PCs and into consumer goods such as flat-screen
TVs.
Maintaining its own network of stores would have put Gateway
into conflict with the other retail outlets, so a decision to close
its own properties was an obvious one to make, Enderle said.
"Gateway made a strategic decision: Either the [Gateway] stores
had to go, or the retail channel had to go," he said.
Gateway will offer more details about its branding and channel
strategy, and discuss any cost implications of the closures, when
it announces its first-quarter financial results on 29 April, the
company said.
Ted Waitt, Gateway's chief executive officer will remains its
chairman and its largest stockholder.
The company's revenue took a dramatic dive in the fourth
quarter, which ended 31 December, as its PC business slowed and it
worked to reinvent itself as a provider of more general electronics
gear. Revenue for the period dropped to $875m (£472m), from $1.1bn
a year earlier.
Gateway's purchase of eMachines was valued at more than $234m in
cash and stock when the deal was announced earlier this year.
Gateway said it hoped to become the third-largest PC company in the
US and the eighth-largest PC supplier in the world.
James Niccolai writes for IDG News Service