Gateway Communications Lays Off 20 Workers, Cites Low Sales

Gateway Communications Inc. said Thursday that it has laid off 20 employees because of a significant drop in sales during the past three months.

The staff reductions represent about 18% of the Irvine-based company’s work force. It was the second round of layoffs at the company this year. About a dozen employees were cut from the payroll in January.

Gateway blamed the layoffs on the recession, as well as intense competition that has forced some computer products makers to lower their prices. Gateway, founded in 1981, makes networking equipment that links personal computers together.

“We expect gross margins will be lower until we realize the impact of our cost reductions later this year,” said Kirk Andrews, chief financial officer.

Employees were given notice in the past week, Andrews said. The company plans to offer severance packages that are still being worked out, he said.

The company said its sales for the second quarter are expected to be “significantly under” the revenue it reported for the previous three months.

The company reported a profit of $408,000 for the first quarter, up 23% from $331,000 in the same period last year. Revenue increased 5% to $6.7 million from $6.4 million.