Gateway sets D-Day for Asian operations

To stay or go--the fate of Gateway Inc's operations outside the US will be decided by early September, said its Asia Pacific spokesperson.
Written by Anand Menon, Contributor
SINGAPORE--To stay or go--the fate of Gateway Inc's operations outside the US will be decided by early September, said its Asia Pacific spokesperson.

There has been mounting speculation that the US-based computer maker could pull out from its foreign markets (including Asia, Europe, Africa, the Middle East and Latin America) as the company continues to revamp its business.

In recent months, Gateway has outlined a new strategy focused on selling PCs, software, accessories and training as a "solution" to consumers and small businesses. However, as earlier reported, there were questions about the viability of this strategy outside the US.

When contacted today, Gateway Asia Pacific spokesperson Mike Buchanan said that a full global review is underway to look into the fate of its overseas markets.

"Gateway will decide on what action if any is necessary in 30 days from August 10," he said. "It may take a little longer…hopefully it will take less." Buchanan added that the review was to see if Gateway could achieve revenue growth and profitability in the regions it competes in.

"If the company decides that they (the overseas markets) can't achieve the goal of being profitable, it might mean significant restructuring or even withdrawal from that particular market," he said.

He did not elaborate on what the "significant" restructurings could be. "Any further restructuring or further changes will be announced within the 30-day period," he said. "It's not possible to speculate what further changes they might be."

International sales--primarily from Europe and Asia--are said to have accounted for 12 percent of its US$1.5 billion global net sales for the three months ended in June, according to Gateway's latest quarterly filing with the Securities and Exchange Commission.

Gateway has an office in Singapore and a manufacturing facility in Malacca, Malaysia. Asked about the output capacity of the Malacca plant, Buchanan said the figure has not been released, but noted that it is capable of producing 50,000 units a month for the Asia Pacific region, including Japan.

On whether the company plans to close this plant and outsource its manufacturing, he said: "The company will also review the Malacca operations." He did not provide further details. The company employs about 400 workers in Malacca and 25 workers Singapore respectively.

In July, Gateway announced restructuring measures, which included the appointment of Hong Kong-based NetCel360 Holdings as its exclusive reseller for its products in Singapore and Hong Kong. Gateway's two country stores in Hong Kong and one in Singapore are operated by NetCel360, Buchanan said.

In addition, Gateway, also said last month that it had closed its Malaysian and Hong Kong offices, and had slashed 240 to 250 jobs since January this year. A Gateway Asia spokesperson then said that the cuts included all 70 employees from its Malaysian sales office, and the remainder from Singapore and Hong Kong.

Meanwhile, the Sydney-based spokesperson said it's business as usual for Gateway in the region, and that consumers can still buy its products and expect after-sales services and support.

Shares of New York Stock Exchanges-listed Gateway last traded at US$11.03, up US$0.06.

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