Gateway’s Lake Forest Plans; Go2 Adds More Retailers
Normally, what executives don’t plan to do isn’t necessarily news. But when the executive sells computer memory products,the prices of which have fallen at a rapid clip,and other memory companies already have sacked workers, well, it is news.
SimpleTech Inc.,formerly the affable Simple Technology,doesn’t plan to lay off workers, according to Chief Executive Manouch Moshayedi.
“We aren’t looking at doing any cost-cutting or layoffs or anything,” Moshayedi said. “We try to keep things pretty slim here.”
Still, Moshayedi said that he was having trouble telling when pricing for computer memory would recover to what it used to be.
“We’ve said that the second quarter would be the weakest, but visibility beyond that is limited,” Moshayedi said.
According to analysts, the future for dynamic random access memory, or DRAM, doesn’t look good. In fact, the DRAM market could see an 18% decrease in revenue this year and severe 46% price erosion compared with last year, according to International Data Corp.
The DRAM industry already has lost the momentum to sustain positive revenue growth this year and in 2002, as the market enters an earlier-than-expected bust cycle. “The stage is set for another market restructuring, with the winners and losers clearly being identified over the next year,” said IDC analyst Soo Kyoum Kim.
To offset slumping DRAM prices, Santa Ana-based SimpleTech has moved to sell more flash memory, which goes into electronics such as digital cameras and digital music players. Still, with 35% of its revenue in flash memory, SimpleTech has a way to go to offset a slowdown in DRAM, which is tied to the computer market.
Gateway May Consolidate in OC
Another development in the saga of computer maker Gateway Inc.’s Lake Forest division: word has it the higher-ups will move part of their Orange County facility to the mother ship’s new digs in Poway and consolidate four OC buildings into one, according to a source familiar with Gateway’s plans.
Company executives plan to move much of the marketing and sales staff to Poway, leaving enough to fit in one building, the source said. Apparently a team of engineers at Gateway’s Lake Forest operation won’t make the move to Poway, a sentiment that seems to run rampant for Gateway’s OC dwellers, forcing the company to reconsider pulling out of OC entirely, the source said.
Any such move would be the second time Gateway has downsized its OC business. Earlier this year, the company moved its server manufacturing to North Sioux City, S.D., resulting in 140 layoffs locally. Gateway executives had been talking with employees individually about moving more operations to Poway and have asked some managers to split their time between San Diego and OC.
Gateway has long said it doesn’t plan to abandon Lake Forest, but it hasn’t specified whether a quiet tiptoe out of town would qualify. Still, given the company’s cash-saving attitude of late, it might not make sense to have two facilities so close together.
“We’re still going to have a significant presence in Lake Forest,” Gateway spokeswoman Donna Kather said late last month.
Go2 Landing Partners
Internet services company go2 Systems Inc., Irvine, recently unveiled the retail partners it signed on in the first quarter. The deals add some 13,000 locations to go2’s directory database of 16 million business listings. Go2 offers technology that allows Web-linked cell phone users to order products at various retailers.
Go2’s latest partners: AMF Bowling Inc., Baja Fresh Mexican Grill, Bertucci’s Brick Oven Pizzeria, Burger King Corp., Eat’n Park Family Restaurants, Hungry Howie’s Pizza Inc., Monical’s Pizza, Mr. Goodcents Subs and Pizzas, Roger’s Gardens, Ruby’s Restaurants, White Castle and Z Pizza, together with franchisees representing hundreds of regional Arby’s locations, some of which are co-branded with Sbarro.
“Our success in delivering accurate and relevant retail information to the wireless public serves both merchant and mobile consumer,” said go2 Chief Executive Lee Hancock. “The steady, significant increases in usage point to the utility of the application and to its acceptance by a growing wireless subscriber audience.”
The company hopes the new partners will help it increase its user base, which it says has grown, with page views increasing an average of more than 20% monthly over the last eight months.
Still, with a wireless slowdown, company executives have been scrambling to cut costs in recent weeks, laying off 27 of its 110 employees and scrapping some plans it had hoped to pursue. Go2, which went from about 15 employees to 110 in the past year, has tried to match the growth pace that industry analysts initially predicted for wireless subscribers.
Chief Executive Lee Hancock told the Business Journal last month that was “50% per month or something way off the charts.” This year, industry growth is slowing to more like 20% per month, he said.
