Gateway plans to lay off 4,700

SAN DIEGO -- Gateway Corp. has pulled the plug on operations in Asia and slashed a quarter of its worldwide work force as part of a new strategy that moves the computer retailer further from its roots as a maker of low-cost personal computers.

Gateway's chairman and chief executive, Ted Waitt, said Tuesday the layoffs of 4,700 employees were part of a restructuring that would take the company "beyond the box."

Sales of the "box," or the personal computer, fell worldwide for the first time this year since Waitt started making affordable computers in an Iowa farmhouse 16 years ago. Analysts say consumers don't see a reason to make the upgrades in the new millennium that kept shipments in double-digit growth year after year.

Gateway, the No. 4 computer maker, has been hit especially hard, due, in part, to its focus on the shrinking U.S. industry. The company lost more than $500 million the first six months of the year and has seen its stock price slump nearly 88 percent off its 52-week high. Shares rose 31 cents, or 3.6 percent, to $8.91 in Wednesday morning trading on the New York Stock Exchange.

Waitt said the company would move to tap high-margin, high-growth U.S. technology markets in five new areas: networking, software applications, training, financing and support services.