Gateway Closes Stores

April 3, 2004
Struggling computer maker Gateway is abruptly closing all 188 of its stores, effective April 9. The closing will eliminate 2,500 jobs, about half of Gateway's workforce.

Gateway is now pinning its hopes for a recovery on eMachines, which it purchased in January, hoping to boost its market share. Gateway has been losing money for three years as rivals Dell and Hewlett-Packard grew at Gateway's expense.

Gateway's stores had recently tried to reposition themselves as home entertainment centers, stocking a line of video monitors, DVD players and similar devices but they were unable to compete against Circuit City, Best Buy and other entrenched players, not to mention Wal-Mart and other large discounters who are increasing their footprint in home entertainment gear.

Gateway said it will continue to sell Gateway machines online and over the phone but hasn't said whether it will try to market its machines through retailers. eMachines are sold by a number of large retailers, and some of those retailers had been unhappy with Gateway's retail stores, which they viewed as competition.

After completings its $290 million purhcase of eMachines, Gateway named eMachines CEO Wayne Inouye its new chief executive, replacing Gateway founder Ted Waitt, who remains the company's chairman.

Under Inouye, eMachines had nine straight quarters of profits on a lean operation of only 138 employees.

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