Gateway to cut 850 more jobs (total 1300)

News.com ^ | 9/10/2003 | John G. Spooner

[lelio]

Gateway will cut at least 1,300 jobs as it tries to streamline its manufacturing, delivery and service operations, an effort first announced last week.

On Tuesday, the Poway, Calif., company notified about 850 customer service and technical support employees that it would be eliminating their positions in a reorganization of its manufacturing system.

The 850 job cuts are in addition to 450 layoffs announced last week, when Gateway made public a plan to close its PC manufacturing plant in Hampton, Va., and to outsource some PC manufacturing.

The additional layoffs involve 200 customer service employees in Kansas City, Kan., and North Sioux City, S.D. They will also affect 650 customer support and warranty service workers in its Sioux Falls, S.D., location, Gateway spokesman Bob Sherbin said.

The job cuts and plant closure are part of Gateway's efforts to control costs and return to profitability, while also working to broaden its appeal with new products.

But there may be more layoffs ahead from the PC maker, as it is not finished getting its new manufacturing and distribution model in place yet, according Sherbin.

"We'd expect any decisions that need to be made will be made ahead of the holiday season--by mid-November," he said.

Ultimately, Gateway wants to transform itself into a consumer electronics business, its executives have said. That plan envisions the company as consumers' preferred purveyor of devices ranging from digital televisions to portable music players.

Gateway has said it will launch 50 new products to support that strategy.

But the shift hasn't been introduced without needing difficult measures. Since the beginning of the year, Gateway has announced about 3,200 job losses, including the recent manufacturing-related cuts and 1,900 layoffs made in March.

The company recently closed two retail outlets in Huntsville and Hoover, Ala., bringing the total number of store closures since January to 82. The Alabama stores did not meet Gateway's performance expectations, according to Sherbin.

The company now has 190 stores, down from 272 at the end of 2002 and 326 stores at the retail chain's peak.

Gateway said last week that it will take a charge of between $120 million and $160 million over the next three quarters to cover the plant closure, the most recent job cuts and other changes. But it expects to save between $115 million and $130 million in operating costs per year as a result.

[lelio]

ping

[truthandlife]

This has nothing to do with the economy and everything to do with Dell blowing them away. Free market economy in action.

[discostu]

Opening those stores was one of the stupidest moves ever. Diversifying their product base while losing money in their primary was another. Gateway, like many of the companies having problems today, screwed themselves with stupidity.

[wideawake]

After the terrible, terrible way they botched my home PC situation (sending us a PC that did not work, trying to charge us for the cost of shipping their useless hunk of junk back to them, trying to get us to wait until it was "serviced" before we even used it once, then finally agreeing to ship us a thoroughly buggy new one without charging us) it wouldn't surprise or upset me to see this poor excuse for a company go under.

[Zavien Doombringer]

The 850 job cuts are in addition to 450 layoffs announced last week, when Gateway made public a plan to close its PC manufacturing plant in Hampton, Va., and to outsource some PC manufacturing.

The Manufacturing Plant in Hampton has been closed for 2 years now! The only Gateway you see here in tidewater are the country stores which aren't doing very well!

[lelio]

everything to do with Dell blowing them away

That's why the HP - Compaq merger surprised me. Why enter into a business where Dell rules the roost and there's no way you can make money in it?

Granted they have consulting practices and one of them (either HP's Superdome / other brand and Compaq's Himalaya line) were making money. But still.

It looks like Gateway is trying to shift into appliances with portable MP3 players and into home entertainment with large plasma HDTVs. However they risk just becoming another reseller. They aren't designing any of those items, just slapping their name on it. What's to stop Dell from going to Gateway's suppliers and asking for some product?

[Zavien Doombringer]

Being a Computer Technician, I can tell you horror stories from gateway (to hell) owners. Tech support would tell a unsuspecting and non-computer savvy person that they need to install the system recover disk, not knowing that thier entire hard drive would be reformatted and the proprietary gateway OS and applications would be installed. Thus, eliminating all documents and saved personal data!
I couldn't recover anything because of the reformat.

[gdani]

After the terrible, terrible way they botched my home PC situation....

I'll second that. I bought a new computer from them a 2 years ago & it's been nothing but nightmares -- hard drive crash within a year, screwed up monitor, bad video card, etc.

Their tech support sucks & it took them ONE MONTH to reinstall a hard drive after I had to drop it off at one of their stores.

Since then, I vowed to always warn people about Gateway's overall crappy service & product.

[Zavien Doombringer]

Dell isn't designing either, they are slapping hardware in thier boxes just like Gateway did. the only difference is marketing technique.

- Zav is CompTIA A+ Certified!

[harpseal]

I am not sure if this realy has anything to do with the economy or trade because of some problems in Gateway's management but a ping anyway.

On or off let me know

[dennisw]

Will the last one out the door at Gateway please switch off the lights?

[ARCADIA]

It is 1200 fewer jobs to add to the growing talley. The rest of it is irrelevant.

[Zavien Doombringer]

ALL YOUR JOBS ARE BELONG TO US!!!

[Voltage]

Build you own! Its easy..a 12 year old can do it. Install only that software you want...not all the crap that is preloaded on the Dell/Gateway/Compaq. Stuff they are probably paid to put on your system, spyware, etc.

[SaveTheChief]

Bought a top of the line Gateway laptop last December and have had to send it back for repairs twice already. This was first and last purchase I will make from Gateway.

Don't get me wrong. I love the computer as it has a huge screen and plenty of power. The problem I have is with the reliability factor and that it is the machine I use for business. I can't have the thing going bad on me when I am about to make a business trip.

Each time I have been into a Gateway store, I have seen people bring their computers in for service. While some of those could be folks just getting an upgrade, it still sends a message about overall quality control.

[AxelPaulsenJr]

I have had good luck with my two Gateway computers. I bet you could start a thread on Dell and get plenty of horror storys about Dell computers.

In I fact recently read a story about Dell outsourcing their tech support to India. Which makes me howl with laughter when Dell runs its "Dell Interns" commercials.

[harpseal]

It is 1200 fewer jobs to add to the growing talley. The rest of it is irrelevant.

That is about it.

[Rebelbase]

I bought one Gateway server and had so many headaches with it that I will never buy another Gateway product again.

I'm typing from a Dell, btw.

[EagleMamaMT]

I love my Gateway. One of their best points, IMO, is their quality, heavy-duty keyboards. I type over 100 words a minute for 8 hours per day (sometimes even longer than that). Cheaply made keyboards just won't hold up.

I worked at a hospital once, in the medical transcription department, that used Gateways. They were used an average of 20 hours per day at least six days a week. Never had any problems with them. No crashes, nothing.

I bought my own Gateway about two years ago when I became an IC. I transcribe on it 8 hours a day and my kids are on it constantly when I'm not online working. It's been great. Only one problem: My keyboard developed a short in it about a month ago. I went to the Gateway store in Springfield, MO, and ordered another (still under warranty) and it was here in less than one week. IMO, Gateway builds a good product.