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Sunday, November 22, 
12:23 am

How long until Gateway sells?

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Gateway computerTroubled computer maker Gateway Inc. announced first-quarter 2007 earnings late Tuesday, adding yet one more reason why the company should consider a sale.

The company recorded a net loss of $8.6 million for the quarter, compared with a $12.3 million net loss for the year-ago period. In the fourth quarter of 2006, Gateway had reported net income of $11.5 million. Of course, new Gateway CEO Ed Coleman touted the company’s accomplishments in the first quarter, including narrowing the operating and net losses from the first quarter of 2006 and increasing U.S. market share sequentially, while at the same time reducing expenses.

Market research firm IDC pegs Gateway as the third-largest U.S. computer maker, with a shrinking 7.2% market share, behind Hewlett-Packard Co., at 24.2%, and Dell Inc., at 26.8%. In worldwide rankings, Gateway doesn't make the top five. The company has struggled to gain market share after its two top rivals cut prices, Reuters reported. Plus, last year Gateway shrunk its work force to 1,700, a far cry from the 7,400 employees it had about three years ago after it purchased eMachines Inc.

Gateway has been considered a takeover target for years, and even fended off a $450 million bid for its retail operations last September, according to TheDeal.com. Analysts say the company can last a few years on its dwindling cash pile, of around $400 million, but beyond that, who knows.

So one has to ask Gateway: Why prolong the agony? —Cheryl Meyer

See story from Reuters
See story from TheDeal.com

 

 

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