T heStreet.com has published a report looking at Gatewayis current, or latest, plans for restructuring. Gateway has been struggling for the last couple of years, and has taken on the role of "beleaguered" that the press used to assign Apple. Gatewayis two biggest problems have been being crushed by Dell in a price war that Dell has been able to handle much more deftly than Gateway, and being saddled with hundreds of under-performing retail stores.
To remind Observers, it was comparison to Gatewayis retail stores that first made analysts, tech pundits, and armchair critics question Appleis own foray into the retail world in the fall of 2001. The differences between the two operations have been long debated and discussed since then, but we noticed a small tidbit in the article from TheStreet that offers a poignant example of exactly how different Apple and Gateway are in this arena.
The article notes that Gateway has announced that it will close 80 of its locations, 28 more than Appleis entire fleet of stores, that will still leave it with a total of 190 Gateway Country locations. Again, Apple has 52 stores open today. The poignant example we mentioned comes from Needham analyst Charles Wolf. From the article:
Gateway has said it will close 80 underperforming stores, reducing the total number of existing stores to about 190 from as many as 350 a few years ago. Wolf estimates the shuttered outlets generated an average of $4 million a year, far less than the $12 million annual average produced by Apple stores, for example.
In short, Gateway has at least 80 stores that regularly bring in a 1/3 of what Appleis stores average. To throw some gross numbers at that: Appleis 52 locations would bring in some US$624,000,000 in a year, whereas these 80 Gateway locations would bring in some US$320,000,000, a little more than half the revenue from 54.8% more locations. We want to stress that those numbers are extremely rough, and are not based on Apple or Gateway filings.
One of the things that has hampered Gatewayis ability to whip its retail operations into shape has been long-term leases on many of its locations that prevented the company from being able to close down underperforming units.
There is more information on Gatewayis struggles in the full article at TheStreet.com.