Published on .

Aug. 29, 2001

By Tobi Elkin

NEW YORK ( -- In addition to Gateway's decision to lay off 25% of the its global workforce and close some facilities, the ailing PC marketer will significantly pare its marketing activities heading into the fourth quarter, typically the most important sales period after the back-to-school shopping spree.

Slackened PC demand and bitter price wars contributed to the layoffs, which were announced Tuesday. Of the 4,600 workers being let go, 2,100 are in the U.S. The company cut 3,000 workers in January.

Scale back marketing plans
Gateway will scale back its national mass market spending to focus on its role as a local provider of technology products and services, a spokesman said. The company will rely heavily on its 300 Gateway Country Stores to provide brand awareness and support, including advertising.

As a result, the company's marketing will become even more tactical and promotional than it has been to date, similar to traditional retail operations such as Circuit City and Best Buy.

Gateway spent $97.5 million from January through May on measured media this year, according to Taylor Nelson Sofres' CMR. The company spent $296 million in 2000.

Plant closings
Gateway has closed five manufacturing facilities in the Asia-Pacific region, one in Salt Lake City and call centers in four U.S. locations. The company plans to exit the European market.

Gateway expects to post a pretax loss in the third quarter, and a modest profit in the second half of the year, excluding one-time items. It said it would take a $475 million charge for restructuring in the third quarter.

The spokesman declined to comment on details of marketing cutbacks. Gateway advertising is handled in-house.

Copyright August 2001, Crain Communications Inc.

Most Popular
In this article: