| Gateway, the fourth-largest US computer maker, announced it would cut about 2,250 jobs and close 19 of its 296 retail stores — including one in downtown Seattle and others in our state — in an effort to further reduce costs.
The 16 per cent employee cut follows a 25 per cent reduction last year when Gateway announced it was closing foreign operations. Other cost reduction measures announced include the closure of four of the company’s 10 administrative and support sites.
Gateway has struggled since the beginning of last year after being battered by weak market conditions and aggressive competition. It has suffered from declining sales and has lost US market share, last month warning that sales would be substantially below expectations as PC shipments fell 15 per cent from the third to fourth quarter. The decline contrasts markedly with seasonal patterns, in which PC sales typically rise 15-20 per cent over the holidays.
Observers point to rival Dell Computer as a key source of the company’s woes. Dell, which like Gateway began as a one-man direct sales operation, has redefined the business rules for the PC sector by leveraging its direct model along with its low expense structure to support pricing that pressures all PC makers.
Gateway said it would attempt to regain market share by investing in its core PC business through the adoption of a more aggressive pricing and marketing strategy. The company’s decision to close its international operations last year was controversial, as analysts, giving the firm a 50-50 chance of survival, note that non-US markets represent the best long term growth prospects for the PC industry. | 
