Gateway Delays Planned Analyst Meeting
May 28, 2004 — By Duncan Martell
SAN FRANCISCO (Reuters) - Consumer electronics and personal computer maker Gateway Inc. <GTW.N> has delayed its June analyst meeting until September, citing the need to finalize its new strategy, the company said on Friday.
Gateway initially informed investors of the delay in an e-mail sent on Thursday and said it would move the meeting to New York from Irvine, California, which is near its Poway, California, headquarters.
The company said that by postponing the planned meeting from June 17 it would be able to provide more details about its distribution plans and cost reductions, among other matters.
Gateway earlier this year bought the profitable, privately held eMachines for $290 million in a bid to expand its presence in low-cost PCs, where eMachines has been strong, and to sell its products through major electronics retailers.
Bear Stearns analyst Andy Neff, who rates the stock a "peer perform," said he viewed the delay in the analyst meeting as a possible negative because investors have been anxious for details on Gateway's turnaround.
"It could be a sign that Gateway's negotiations with retailers to reintroduce the Gateway brand on retail store shelves is taking longer than planned," Neff wrote in a note to clients.
Gateway spokesman Ted Ladd said that the meeting's delay was a result of shifting the venue to New York and intended "to make sure we would be able to deliver the full story to analysts."
"We are in discussions with most of the big-box retailers and talks have been promising so far," Ladd said.
He said Gateway would be in its "quiet period" for much of July ahead of the release of second-quarter earnings, and noted that many analysts are on vacation in August, making September the most logical choice. A precise date has not been set.
Ladd declined further comment on the company's integration of the eMachines acquisition and turnaround plans.
Gateway has tried a number of strategies since it fell on hard times in 2001 as it sought to turn a profit amid stiff competition from Dell Inc. <DELL.O> and Hewlett-Packard Co. <HPQ.N>
As part of Gateway's acquisition of eMachines, that company's chief executive, Wayne Inouye, became CEO of Gateway, replacing co-founder Ted Waitt, who remains chairman.
Since then it has announced thousands of layoffs and closed its remaining 188 Gateway retail stores. Gateway still plans to end the year with 2,000 employees, down from its current level of about 3,500, Ladd said.
At Gateway's annual meeting earlier this month, Inouye said a central tenet of the company's plan to boost revenue is expanding its presence in retail stores such as Best Buy, where Inouye once worked.
Gateway also plans to position Gateway-branded PCs as premium products sold through its Web site, over the phone, through retailers and to professionals. The eMachines brand will remain as a lower-cost PC aimed at retail outlets.
Waitt's latest plan for Gateway was to turn it into what he calls a "branded integrator," selling a wide range of digital devices beyond PCs, including media center PCs, digital cameras, handheld computers and wireless home networking equipment.
Gateway shares fell 2 cents to $3.96 on Friday on the New York Stock Exchange. The stock has fallen 14 percent this year, compared with an 8 percent decline in shares of Hewlett-Packard Co.<HPQ.N> and a 3.5 percent rise in Dell Inc. <DELL.O> stock.
(Additional reporting by Caroline Humer in New York)
