He also sharply raised an earlier estimate of first-quarter special charges. He declined to forecast results for the full year and said the company doesn't expect to return to historic growth and profitability levels until 2002. Even without this setback, Gateway faces declining sales and has been burning up money. Meanwhile, Dell Computer Corp. has been targeting Gateway's customers and, by Dell's account, has now taken away the No. 3 spot in the U.S. in home-computer sales. Gateway's predicament suggests just how tough an environment PC sellers face.
Margins seem to get crunched further each passing year.
With more than half of U.S. households already owning a PC, new buyers are harder to come by. And with few programs requiring the newest computers, owners can easily defer replacement purchases in a weak economy. Though known for his pranks and his uniform of patched jeans and cowboy boots, he remains passionate about the company he co-founded in an Iowa farmhouse in 1985. The plan Wednesday, at a meeting in suburban San Diego near where the company is based, Waitt outlined his plan to set it right. Gateway will cut costs by offering fewer products, handle its own advertising, retrench in retailing and pull back from some international markets.