New York - Gateway reported yesterday it will undergo a 25 percent staff reduction, pull out of the Asian market and consider making the same move in Europe in order to quickly shrink costs and regain profitability by the end of the year.
The announced late Tuesday that just under 5,000 employees of its worldwide workforce would be cut with about 15 percent being U.S.-based employees. As part of an overall consolidation of sales and customer service Gateway is shutting down its call centers in Hampton, Va.; Vermillion, S.D.; Salt Lake City; and Lake Forest, Calif. The call centers located in Sioux Falls and North Sioux City, S.D.; Kansas City, Mo.; Rio Rancho, N.M.; and Colorado Springs, Colo. will remain open.
The manufacturing segment of the company was also effected by today's announcement. The Gateway factory in Salt Lake City was closed and a new, simplified production model will be implemented at the company's Hampton and North Sioux City facilities.
In addition, Gateway is pulling up its stakes along the Pacific rim by immediately suspending operations in Malaysia, Singapore, Japan, Australia and New Zealand and is weighing the possibility of abandoning the European market. The fate of the European operation will be made in the next 30 days, the company said.
Gateway CEO Tedd Waitt said the moves were tough to make, but the only way to ensure a profitable future.
Gateway expects to post a slight loss in the third quarter of 2001, primarily due to the charges associated with the reorganization, and post a profit for the fourth quarter. It is also anticipating domestic unit volume to increase during the last two quarters.