Gateway Will Cut Its Workforce to Mid-5,000 Level From 7,400 Employees

Personal computer maker Gateway Inc., which has lost $1.84 billion in the last three years, will reduce its workforce to mid-5,000 from the current 7,400.

“We clearly have some additional work” to reduce the number of employees, Chief Financial Officer Roderick Sherwood III said during a webcast at the Morgan Stanley Semiconductor & Systems Conference in Dana Point. The cuts will follow the acquisition of EMachines Inc., which may happen after Monday, he said.

Gateway on Jan. 30 said it would buy EMachines because it has reported nine straight quarters of profit by selling low-priced PCs at retail stores. EMachines Chief Executive Wayne Inouye will become CEO of Gateway upon close of the deal. Closely held EMachines has 138 workers and said it had more than $1 billion in revenue in 2003. Gateway had $3.4 billion in 2003 sales, according to Bloomberg data.

Shares of Poway, Calif.-based Gateway rose 38 cents, or 7%, to $5.81 on the New York Stock Exchange. The shares have risen 42% since the EMachines acquisition was announced.

The purchase of EMachines, based in Irvine, may happen after Monday when the Federal Trade Commission gives its approval, Sherwood said. He had said Feb. 24 that the purchase would close as soon as March 1 or that it would be delayed a few weeks.