Gateway in shake-up

January 30, 2001: 9:56 a.m. ET

Troubled PC maker boots executives as it struggles with slowing demand

NEW YORK (CNNfn) - A day after PC maker Gateway's CEO resigned, the company initiated a major management shakeup starting with new Chief Financial Officer Joe Burke.

Gateway (GTW: Research, Estimates) founder Ted Waitt assumed the company's top spot Monday after former chief executive Jeff Weitzen stepped down. During a brief teleconference Tuesday, Waitt said Weitzen chose to retire just a year after taking the post.

The shakeup comes as Gateway, like other computer makers, suffers from waning PC demand in the face of a slowing economy and higher energy prices, which dampened consumer spending, and a trending shift toward smaller information devices.

The San Diego-based company missed lowered fourth-quarter estimates on Jan. 11 and laid off more than 3,000 people. The quarter marked the first time Gateway had ever lost money since its founding in 1985. What profits it did earn came from "beyond the box" services, such as Internet access.

The company's stock, which has been cut down to around $21 from its 52-week high of $75, closed up 89 cents at $21.66 Monday.

"Things are what they are. Jeff decided to retire, and I love Gateway," Waitt said during Tuesday's call in which he did not take questions. "The opportunity for us is good. Clearly we have some challenges ahead of us."

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Waitt said he remained committed to manufacturing PCs, saying he planned to extend the business, but at the same time the company will begin to focus more on information devices that are now becoming popular.

"Is the PC dead? I definitely don't think so. I think there's a lot of legs left in the PC," Waitt said. "We're going to look at and continue to invest in information devices. I still own 100 million shares in this company, and I'm going to do everything in my power to insure this company's success."

Waitt also introduced Burke who said simply that he looked forward to working with the Street.

Burke replaces John Todd, who is leaving the company "to pursue other interests," the company said in a statement Tuesday. Burke, who joined Gateway in October, 1995 as a vice president for market development, formerly held financial positions at PricewaterhouseCoopers and Blockbuster Entertainment Corp. (BBI: Research, Estimates).

In addition, Gateway also named 12-year company sales and marketing veteran Bart Brown senior vice president for Gateway consumer, replacing Cliff Holtz.

Dave Russell was promoted to senior vice president from vice president, supplier management.

The company also said other executive officer position had been eliminated with those officers leaving the company.