Headquarters: 7565 Irvine Center Drive, Irvine
Employees: 1,800; 560 in OC
Business: computer maker
Market value, as of April 4: $785 million
12-month revenue: $3.9 billion, up 6%
12-month net income: $6 million, versus $568
million loss a year earlier
Year in review: On the surface, it looks like Gateway Inc. made progress in 2005. Scratch a little deeper and the computer maker’s problems are probably worse than they were a year ago.
The good news: Sales rose 6% and the company swung to a profit,albeit slim,of $6 million, versus a loss of $568 million in 2004. It was the company’s first profit in years and seemed to mark a notable point in Gateway’s comeback under former chief executive Wayne Inouye.
The bad news: Competition continued to dog Gateway. The company’s focus on retail sales proved to be only half right. Investors scorched Gateway because sales to a key target,businesses,was a lower priority than expected. Another shortcoming was direct sales to consumers, which weren’t a key focus under Inouye.
The result: Inouye stepped down earlier this year.
Gateway is led by interim chief executive, Rick Snyder. He’s a leading candidate to become permanent chief. Snyder is a former Gateway president who took the chairman’s spot after Ted Waitt stepped down in 2005.
What’s ahead: A big push on two fronts: sales to big businesses and direct to consumers. That’s easier said than done. Competition from market heavies Dell Inc., Lenovo Group Ltd. and Hewlett-Packard Co. looms.
And there’s a threat to Gateway’s sweet spot,consumers and small businesses.
Lenovo, which bought IBM Corp.’s computer-making unit last year, said in February that it wants a piece of the lower-end market.
Meanwhile, emerging computer makers such as Taiwan’s Acer Inc. are looking to make a push in the U.S.
At least Gateway won’t have to deal with a patent-related headache. It agreed about a month ago to pay $47 million to settle its two-year patent dispute with HP.
Wall Street’s take: Worries about competition from Acer drove Goldman Sachs Group Inc. analyst to downgrade Gateway shares to “underweight” from “in-line” earlier this year. Gateway, meanwhile, has seen its shares cut in half during the past year.
Analysts are looking for Gateway to post sales of $4.2 billion this year. Net income is expected to be about $50 million.
WHO’S IN CHARGE
RICK SNYDER
Chairman, interim chief executive
Joined company: director since 1991
Education: bachelor’s, master’s in business administration and law degrees from University of Michigan
Career: Snyder’s Gateway career started as executive vice president from 1991 to 1996. He was named president and chief operating officer in 1996 and left the company in 1997 to found Avalon Investments Inc., a venture capital firm.
Notable: He’s all about Michigan and his alma mater. Snyder is a former adjunct assistant professor of accounting at the University of Michigan. He also is a member of three of the University of Michigan’s advisory boards, including chairman of the Technology Transfer Board. Works with the Nature Conservancy’s Michigan chapter.
