Gateway Inc., which is undergoing a transition away from simply being a PC manufacturer, lost $200 million in the first quarter on revenue of $844 million.
The loss—which included a $78 million restructuring charge—was more than the $126 million lost in the same period last year and the $72 million lost in the fourth quarter 2002.
The revenue figure also was a drop, from $992 million in the first quarter 2002 and the $1.06 billion it generated during the holiday season in the fourth quarter.
However, Gateway officials said the Poway, Calif., company is on track to becoming profitable by the end of the year and increasing sales of its higher-end non-PC products, such as its successful 42-inch plasma TV offering.
“The number one goal I have right now is to transform Gateway from a traditional PC manufacturer to a branded integrator,” Chairman and CEO Ted Waitt said during a conference call with analysts on Thursday.
That means having a wide range of Gateway-branded products—from PCs and systems to digital TVs, mobile devices and services—that can be brought together to create a single solution, Waitt said.
For example, during the first quarter ended March 31, Gateway rolled out two new mid-range servers, the Gateway 960 and 980 server lines, and two rack-mounted servers earlier this month, Gateway 955 and 975 systems.
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Rod Sherwood, executive vice president and chief financial officer, said that in the fourth quarter 2002, non-PC products accounted for 17 percent of Gateways product mix, and that he expects that will grow throughout 2003. The movement away from simply selling PCs partially contributed to Gateway PC sales dropping to 506,000 for the quarter, down 22 percent from the first quarter 2002.
Still, Gateway plans to bring its PC business back to profitability as well, Waitt said. One move will be to roll out low-end, lower cost PC products, he said.
“Entry-level PCs are part of our overall strategy,” he said.
Gateway also cut expenses, closing 80 of its 272 Gateway Country Stores and cutting about 1,900 jobs, or about 17 percent of its workforce. Company officials hope to cut about $125 million in expenses this year.
“Were going to do what it takes to get this business profitable and stay there,” he said.
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