Year in review: Turmoil marked 2006.
Amid booming sales through stores but a slump selling directly to businesses and governments, turnaround chief executive Wayne Inouye stepped down in a move that surprised many.
For six months, Gateway crept by with an interim leader. Shareholders complained the company was rudderless. Lap Shun “John” Hui, who had sold his Irvine-based eMachines to Gateway only two years earlier, offered $450 million to buy some or all of the company. When Gateway declined, a near revolt began.
A dissident group threatened to run their own slate of directors. Enter Chief Executive Ed Coleman, coming from Melville, N.Y.-based electronics distributor Arrow Electronics Inc. with 30 years in the computer industry.
To appease dissidents, Gateway’s board expanded by two members and the rancor quieted down.
At the tail end of the year, Gateway posted a modest profit. And some $55 million in expenses were set for trimming, including more than 100 jobs.
What’s ahead: Coleman has spent his time refocusing the company.
Late last year, he outlined plans to bail on the business market, where Gateway hasn’t been able to compete with Dell Inc. and Hewlett-Packard Co. Instead, Gateway is focusing on consumers (not unlike how it had under Inouye). Among consumers, Gateway has about 95% brand awareness, according to the company.
Looming over Gateway is fevered buzz that it could be bought by Taiwan’s Acer Inc. A deal would make a lot of sense for Acer, which would get into the U.S. market with a deal.
The buzz grew so loud that Gateway took the extraordinary step of saying it wasn’t in active negotiations with Acer.
Wall Street’s take: Gateway’s shares are down 98% from its 1999 peak. They’re up slightly for the year so far and for the past 12 months (thanks in part to the Acer speculation).
Some analysts see a buying opportunity now that Coleman is giving some focus. One analyst upgraded the shares in August while another recently started coverage with a “buy” rating.
,Dan Anderson
WHO’S IN CHARGE
ED COLEMAN
Chief executive, Gateway
Joined company: 2006
Education: bachelor’s in economics from the College of William and Mary, master’s in business administration/marketing from Indiana University
Career: Previously served as senior vice president and president of Arrow Electronics’ enterprise computer solutions; chief executive of CompuCom Systems Inc.; variety of roles at Computer Sciences Corp., IBM Corp. and MTS Inc.
Notable: Became a first-time father at 52; second child born in January. Likes hiking in the Swiss Alps.
Headquarters: 7565 Irvine Center Drive, Irvine
Employees: 1,648; 501 in OC
Business: computer maker
Market value, as of April 2: $832 million
2006 revenue: $3.98 billion, up 3%
2006 net income: $9.6 million, up 55%
