Best Buy Rolling Out Gateway PCs
By Doug Olenick and Alan Wolf -- TWICE, 7/23/2004
Poway, Calif. — Gateway released its much anticipated retail plan on July 22, which has the direct PC seller adding Best Buy as an outside retailer.
According to Gateway’s CEO Wayne Inouye, Best Buy will begin carrying new Gateway-branded notebooks later this month, followed by a rollout of desktop models in August. Gateway will not limit itself to Best Buy and is pursuing deals with other retail chains, he said, adding an agreement could be struck in the next few weeks.
This news was announced during Gateway’s second quarter financial analyst conference.
The back-to-school move ends months of speculation over Gateway’s distribution plans for its flagship PCs after shutting its 188-store retail chain in April. The Gateway stores had reportedly been a sticking point in negotiations with Best Buy, which viewed them as direct competitors. Best Buy is the vendor’s largest customer for its value-priced eMachines line, which was acquired by Gateway in March but not sold through the company’s retail outlets nor directly.
Best Buy will offer the Gateway notebooks and desktops in each of its 622 stores. The number of SKUs, their specifications and pricing were not disclosed, pending the rollout.
The company’s financial release had Gateway reporting a massive $339 million loss for the second quarter on sales of $837.5 million, primarily due to costs related to corporate restructuring and absorbing eMachines, which the company bought in March.
Gateway reported that without these extra costs the quarterly loss would have been $104 million. During the same period last year the company posted a $72.5 million loss. Despite these financials troubles, Inouye remained upbeat. His optimism was buoyed by a large 62 percent increase in PC sales, The company shipped 795,000 units, which for the first time included eMachines models. Overall the retail segment accounted for $306 million of the quarter’s sales.
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