Gateway trims workforce, posts higher profit

Struggling computer maker Gateway Inc. said Thursday that it had eliminated nearly 100 jobs as part of a cost-cutting effort designed to save it $30 million to $35 million a year.

The company, which also makes plasma TV sets and other electronic devices, said it would take a charge in the fourth quarter for severance costs.

The announcement came as the Irvine-based company reported slightly higher third-quarter earnings on lower revenue and flat personal computer sales.

Gateway has been under intense shareholder pressure to improve its performance. In September, it rejected a $450-million offer to buy its retail business.

Its board is evaluating a request from a large shareholder that would place three of the investor’s representatives on the board and eliminate a “poison pill” provision, making it easier for the company to be sold.

The need to boost performance quickly was acknowledged Thursday by Gateway’s new chief executive, Ed Coleman, who took the job in September.

“I come to Gateway with a sense of urgency,” he told analysts during a conference call. “We’re here to win in the marketplace and create value for our shareholders.”

Gateway reported net income of $18.2 million, or 5 cents a share, compared with $15.1 million, or 4 cents, a year earlier. The results included a one-time net tax benefit of $8.2 million, or about 2 cents a share.

Revenue for the quarter ended Sept. 30 fell to $963.1 million from $1.02 billion a year earlier, mainly because of softer sales in the professional market. Retail sales rose about 4%.

Gateway shares, which fell a penny to $1.64 in regular trading, rose 8 cents, or 4.9%, after hours.