Pamalicious
04-01-2004, 05:08 PM
Does this mean clearance? :upto:
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Gateway to Close Its 188 Retail Stores
1 hour, 26 minutes ago Add Top Stories - Reuters to My Yahoo!
By Duncan Martell
SAN FRANCISCO (Reuters) - Gateway Inc. (NYSE:GTW - news) on Thursday said it would close its remaining 188 stores and eliminate about 2,500 retail jobs, or 38 percent of its workforce, ending a controversial chapter for the struggling computer and consumer electronics maker.
Poway, California-based Gateway, which opened its first store in late 1996 in North Carolina and at one point had more than 320 of them, made the move less than one month after it completed its acquisition of eMachines for $290 million.
Wayne Inouye, who ran eMachines and took over as chief executive of Gateway from co-founder Ted Waitt, who remains chairman, is not wasting time to try to right the ship at Gateway, analysts said. He and his executives turned around eMachines and built it into a tightly run and profitable distributor of low-cost PCs with 2003 revenue of $1.1 billion.
"The eMachines team has a real take-no-prisoners attitude when it comes to cost," said Martin Reynolds, an analyst at Gartner Inc. "They're very good at managing retail channels and costs."
Shares of Gateway rose in after-hours trade to $5.60 on the INET electronic brokerage, up from their close of $5.40 on the New York Stock Exchange (news - web sites). In regular trade, Gateway stock rose 12 cents.
Boosting its access to retailers such as Best Buy Co. (NYSE:BBY - news), which along with others sells eMachines PCs, was one of the principal rationales for Gateway to buy eMachines. With the store closings, due by April 9, a Gateway spokesman said it will redouble its efforts to build a broader retail distribution network for its PCs, flat-panel TVs, digital cameras and other consumer electronics products.
Brad Williams, the Gateway spokesman, said that the company would disclose the financial impact of the stores' closure when it reports quarterly results April 29 and would provide additional detail about its brand and channel strategy "in the weeks to come."
For the time being, it's expected that eMachines PC will retain their brand name on retailers' shelves. Had Gateway kept the stores, it could have caused friction with retailers like Best Buy.
Best Buy's Chief Executive Brad Anderson said last month at the Reuters Consumer Products and Retail Summit in New York that he was "troubled" with the connection between Gateway and eMachines, because it meant he was essentially selling a competitor's merchandise.
That friction is now gone.
Gateway's purchase of its profitable rival doubled its market share in the United States to about 7 percent, and it forecast it will return to sustained profitability in 2005 as a result of the acquisition.
Gateway's stores had long been criticized by analysts and investors as an expensive drag on cash flow because of lease costs and the difficulty of managing inventories.
Just last May, Waitt rolled out an expensive plan to remodel its stores to make them a destination of sorts for customers where they could explore all of Gateway's wares in a more relaxed setting.
That remodel was completed in September, in time for the Christmas shopping season, but, ultimately, the die had long been cast.
"It was a bold try, and Ted had a vision there, but market forces were against him. It was just too expensive to make those stores work," Reynolds said.
++++++++++++++++++++++++++++++++++++++++++++++
Gateway to Close Its 188 Retail Stores
1 hour, 26 minutes ago Add Top Stories - Reuters to My Yahoo!
By Duncan Martell
SAN FRANCISCO (Reuters) - Gateway Inc. (NYSE:GTW - news) on Thursday said it would close its remaining 188 stores and eliminate about 2,500 retail jobs, or 38 percent of its workforce, ending a controversial chapter for the struggling computer and consumer electronics maker.
Poway, California-based Gateway, which opened its first store in late 1996 in North Carolina and at one point had more than 320 of them, made the move less than one month after it completed its acquisition of eMachines for $290 million.
Wayne Inouye, who ran eMachines and took over as chief executive of Gateway from co-founder Ted Waitt, who remains chairman, is not wasting time to try to right the ship at Gateway, analysts said. He and his executives turned around eMachines and built it into a tightly run and profitable distributor of low-cost PCs with 2003 revenue of $1.1 billion.
"The eMachines team has a real take-no-prisoners attitude when it comes to cost," said Martin Reynolds, an analyst at Gartner Inc. "They're very good at managing retail channels and costs."
Shares of Gateway rose in after-hours trade to $5.60 on the INET electronic brokerage, up from their close of $5.40 on the New York Stock Exchange (news - web sites). In regular trade, Gateway stock rose 12 cents.
Boosting its access to retailers such as Best Buy Co. (NYSE:BBY - news), which along with others sells eMachines PCs, was one of the principal rationales for Gateway to buy eMachines. With the store closings, due by April 9, a Gateway spokesman said it will redouble its efforts to build a broader retail distribution network for its PCs, flat-panel TVs, digital cameras and other consumer electronics products.
Brad Williams, the Gateway spokesman, said that the company would disclose the financial impact of the stores' closure when it reports quarterly results April 29 and would provide additional detail about its brand and channel strategy "in the weeks to come."
For the time being, it's expected that eMachines PC will retain their brand name on retailers' shelves. Had Gateway kept the stores, it could have caused friction with retailers like Best Buy.
Best Buy's Chief Executive Brad Anderson said last month at the Reuters Consumer Products and Retail Summit in New York that he was "troubled" with the connection between Gateway and eMachines, because it meant he was essentially selling a competitor's merchandise.
That friction is now gone.
Gateway's purchase of its profitable rival doubled its market share in the United States to about 7 percent, and it forecast it will return to sustained profitability in 2005 as a result of the acquisition.
Gateway's stores had long been criticized by analysts and investors as an expensive drag on cash flow because of lease costs and the difficulty of managing inventories.
Just last May, Waitt rolled out an expensive plan to remodel its stores to make them a destination of sorts for customers where they could explore all of Gateway's wares in a more relaxed setting.
That remodel was completed in September, in time for the Christmas shopping season, but, ultimately, the die had long been cast.
"It was a bold try, and Ted had a vision there, but market forces were against him. It was just too expensive to make those stores work," Reynolds said.