Gateway is to cut another 850 manufacturing jobs in addition to the 450 announced last week, and further layoffs will come later this year.
Most of the employees work in customer service or warranty support positions, said Bob Sherbin, a Gateway spokesman.
Last week, Gateway announced it would outsource most of its manufacturing work to outside companies to implement an order fulfilment model.
It has been struggling to return to profitability, and has sought to reduce its expenses by hundreds of millions of dollars over the past year.
Gateway will work with a number of outsourcing firms to handle its manufacturing and service needs, but Sherbin declined to reveal the identity of Gateway's outsourcing partners. Those firms are "multinational corporations".
More layoffs will follow later this year, but the company is still making decisions as to how many employees and what locations will be affected.
"We are continuing to look to do things more efficiently, and there will be more layoffs. But we have said manufacturing is something we intend to do in the forseeable future, and we do not intend to get out of manufacturing altogether," he said.
At the end of 2002, Gateway had 11,000 employees. After all of the recent manufacturing cuts are completed, the company will be down to about 7,200 employees.
Gateway has rolled out several products this year, including digital cameras and storage devices, as it attempts to brand itself as a company that sells more than just PCs. The PC market, however, appears to be on an upswing, according to IDC research.
Tom Krazit writes for IDG News Service