Gateway considers exit from Europe as it cuts 5,000 jobs

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The Independent Online

The US computer maker Gateway is to cut about 5,000 jobs, or 25 per cent of its worldwide workforce, take a $475m (£327m) third-quarter charge, and close its operations around the Pacific Rim and possibily in Europe.

The US computer maker Gateway is to cut about 5,000 jobs, or 25 per cent of its worldwide workforce, take a $475m (£327m) third-quarter charge, and close its operations around the Pacific Rim and possibily in Europe.

The company, which has been hit by a fierce price war led by its rival Dell, said it expected its restructuring moves to save about $300m a year. The third-quarter charges include about $200m for the possible exit from Europe.

Gateway, which ranks as the second-largest direct seller of PCs behind Dell, also said it would cut about 15 per cent of its US work force and close call centres in four states and a manufacturing plant in Utah. It will also shut its operations in Japan, Australia, Malaysia, New Zealand, and Singapore.

The company said it now expects to return to profitability in the fourth quarter. Previously, officials said they did not expect that to happen until fiscal 2002. Gateway also said it expected US unit volume to increase sequentially during the third and fourth quarters.

Shares of Gateway rose 3 per cent to $8.86 in after-hours trading, adding to a 10-cent gain during the regular session in New York. The stock fell steeply in mid-July, when Gateway reported a second-quarter loss and executives said they saw no quick turnaround.

"As tough as these decisions were to make, we're doing all the right things to create a new company with a unique competitive edge and a healthy, profitable future," said Ted Waitt, Gateway's chairman and chief executive. "We're planning to win by building a lean, nimble organisation that is unified and focused on our customer base unlike any other time in our history."

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