The sacking of the Gateway 3,000

Gateway has added to the gloom in the PC sector by sacking 3,000 workers, cutting forecasts and announcing falling profits.

The 3,000 positions will be cut worldwide, representing more than 10 per cent of the workforce, including staff in sales, retail and manufacturing. The company lost $94.3m in Q4 2000, including a previously announced $187m charge on earnings stemming from a write down on various high-tech investments, and inventory problems resulting from falling demand. Without the charge, the company would have made small profit - $37.6m or $0.12 per share - well below analysts' forecasts. Sales in Europe, where Gateway does the majority of its business, were particularly bad - down 30 per cent on a revenue basis. The company made significant price cuts in the past quarter, and the company expects to cut them further in 2001. One thousand three hundred layoffs are directly related to cutting manufacturing costs. However, the company made a small profit on sales of "beyond-the-box" products and services, accounting for 24 per cent of revenue. The company lowered profit expectations for 2001 to $1.44 per share. Yesterday Hewlett Packard warned that earnings for the quarter ending 31 January 2001 will fall short of estimates, citing a slowdown in IT spend. Compaq has also issued a Q4 2000 profit warning, and Dell has also predicted slower sales.