The new leaders at Gateway Inc. looked out on a landscape of stunted earnings and organizational storm damage last week, and said a proper assessment of the San Diego-based computer-maker would take a month.
“There’s been a lot of anticipation that things were bad and that’s why these changes happened,” said company chairman and co-founder Ted Waitt, who on Jan. 29 re-assumed the CEO’s job at the financially challenged computer maker.
“The way I’m viewing things is the opportunity for us is big,” said Waitt, who also holds roughly 30 percent of the company’s stock.
Waitt made his comments in a Jan. 30 conference call, saying CEO Jeff Weitzen had retired and Waitt’s own team was taking places in the executive suite. CFO John Todd left the company, while senior vice president Joe Burke, who has 5 & #733; years with the company, was taking over as CFO.
Waitt and Burke declined to take questions in last week’s conference call. Burke said a Feb. 28 analyst meeting will be the first chance he and Waitt will have “to be completely prepared to give an update on the status of our current operations.” Do not expect Gateway representatives at analyst conferences before then, he said.
Waitt said his top priority is to grow the business.
“After that, clearly we’ve got to realign the cost structure. There are a lot of things we can do there,” he said, speaking of “aggressive” pricing and a continuation of the company’s “beyond-the-box” strategy , a concentration on augmenting the PC with products and services.
“It’s crucial that we have it,” Waitt said of the strategy. “We do (it) better than anyone else.”
While the company is “committed” to Gateway Country retail stores, Waitt said Gateway would “re-examine” plans to open additional ones.
The company announced plans last month to cut 12.5 percent of its 24,000-member staff. Most work out of town; Gateway has about 400 people at its San Diego headquarters.
Company spokesman John Spelich said Gateway has no plans to relocate its headquarters.
Gateway reported a loss of $94.3 million on revenues of $2.37 billion during the fourth quarter of 2000, which takes in Christmas season sales. Contributing to the loss was a $187 million pre-tax charge to earnings, mostly due to a write-down of company investments in tech companies and other assets.
By comparison, Gateway reported a profit of $126 million on revenues of $2.55 billion during the fourth quarter of 1999.
As it heads into 2001, Gateway’s top management is “really summed up by Ted Waitt,” said Kevin McCarthy, an analyst with Credit Suisse First Boston in New York, saying he did not see “a tremendous number of outsiders” in the executive suite.
“Really what we did was just flatten the organization. My management style is a lot different than Jeff’s. What I needed was a faster, more aggressive, more experienced team,” Waitt said. In addition to Burke, new top managers reporting to Waitt are Bart Brown, senior vice president for Gateway Consumer, who is replacing Cliff Holtz, and Dave Russell, senior vice president for supply chain management.
Published reports also said Vice Chairman David J. Robino had left the company.
Analyst Andrew Neff of Bear, Stearns & Co. in New York raised the question whether Gateway would be put up for sale. Spelich said the company does not comment on that sort of speculation.
Asked about a possible sale, Credit Suisse’s McCarthy said Gateway has some attractive aspects, including its brand image (with the cow-spot graphic design) and its beyond-the-box strategy.
But he saw a wider motivation in Waitt.
“He’s got a lot of pride.”
