Gateway to Cut 140 Jobs at Lake Forest Plant

With computer sales slumping, Gateway Inc. said Tuesday that it is eliminating 140 assembly-line jobs in Lake Forest and may slash more positions there within the next month.

San Diego-based Gateway, the No. 2 direct seller of personal computers, said it is moving its North American server production from Lake Forest to a plant in North Sioux City, S.D., to consolidate operations.

The reductions come less than two weeks after Gateway announced plans to cut about 10% to 12% of its staff nationwide.

“We could see further layoffs at the Lake Forest facility,” company spokesman Tyson Heyn said. “In fact, I would say it is likely.”

Gateway employs about 660 workers in Orange County in sales and marketing, product development and sales support. The company also has 400 employees at its San Diego headquarters, and could “potentially” scale back operations there as well, Heyn said.

The job cuts are expected to take place by the end of March, he said.

On Jan. 11, the company said it intended to shed 2,400 to 3,000 of its 24,000 positions after posting a disappointing fourth quarter.

Profits tumbled 70% to $37.6 million, or 12 cents a share, from $126 million, or 38 cents a share, in the fourth quarter of 1999. Sales fell 7% to $2.37 billion.

Gateway is by no means the only computer firm struggling. On Monday, Dell Computer Corp. warned its profit would be hit by the global economic slowdown.

Shares of Gateway closed Tuesday at $22.15, up 70 cents on the New York Stock Exchange. The company’s stock has lost more than 64% of its value in the past year.