Beleaguered Gateway gets new CEO (5th CEO in 6 years)

20 years ago

“Gateway has tapped J. Edward Coleman, a 31-year veteran of the distribution and services side of the computer business, to be its next CEO,” Michael Kanellos reports for CNET News.

Kanellos reports, “He is the fifth CEO (four permanent and one interim) in six years and, like his predecessors, will face the challenge of getting Gateway out of the budget end of the PC business. Although the company continues to ship PCs at a rapid rate, it has had difficulty churning out profit consistently.”

“Coleman will have his work cut out for him. Over the past few years, Gateway has tried a number of different strategies–getting into consumer electronics, getting rid of its stores, selling more PCs in retail, aiming for budget customers–but it has continued stumble when it comes to profits,” Kanellos reports. “The company reported a net profit during the second quarter of 2005, its first time in the black after 13 consecutive quarterly losses. It then reported profits for the next two quarters and for the the year. But so far in 2006, Gateway has lost $12.3 million in the first quarter and $7.7 million in the second quarter.”

Kanellos reports, “In August 2006, Lap Shun “John” Hui made an offer for $450 million cash to buy the group inside Gateway that sells PCs to retail stores. Gateway’s market capitalization hovered around $725 million at the time. He was rebuffed.”

Full article here.

MacDailyNews Take: Gateway is simply a victim of the PC box assembler’s race to the bottom. Dell and HP are killing Gateway.

Now, as with any new product or technology (see automobiles, televisions, etc.), the vast majority of the first wave of personal computing buyers had no idea what they were buying. Hence Microsoft’s Windows’ current market share numbers; it’s just now beginning to decline. Buyers today have or are finally starting to get a clue. PC box assemblers offering insecure, upside-down and backwards fake Macs got away with it for the first wave. They won’t be so successful in the future. The educated personal computer buyer is the enemy of Gateway, Dell, HP etc. The PC box assemblers, followed by Microsoft, are in for a world of hurt.