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Gateway Liquidates Retail Stores, Makes Best Buy Deal
Jun 15, 2004
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Shoppers will soon be able to buy some of Gateway's MP3 players, home entertainment systems, and flat-panel television sets at Best Buy stores.

Gateway is liquidating inventory left over from its 188 Gateway Country stores, which it closed in April as part of a reorganization. Most of the products are slightly outdated, so they could be sold at a discount, though Best Buy won't confirm this. All Best Buy stores and its Web site are expected to have the products soon.

Even so, Best Buy will not sell Gateway PCs. Many tech analysts have been expecting such a deal because new Gateway CEO Wayne Inouye is a former Best Buy vice president.

"We're continuing to talk with Gateway, but no decisions have been made (on PCs)," Best Buy spokesman Kevin Crockett said.

Gateway used to sell its products only through its own stores, Web site, and catalogs. But the high cost of running the operations made it hard for Gateway to compete with leaner rivals. Last year, Gateway merged with former competitor eMachines, which sells PCs through stores such as Best Buy and Circuit City. Gateway is expected to adopt the same model.

Best Buy is one of Gateway's first retail deals. Gateway also started selling some laptops in Office Depot stores in March. Analysts say the company is talking with other electronics chains and mainstream retailers, such as Wal-Mart.

The Best Buy deal is good news, according to IDC computer analyst Roger Kay. Gateway needs to have an established retail presence before the crucial back-to-school and holiday shopping seasons, when most consumer PCs are sold, he said.

"If they can get their (sales) channels lined up by August, they'll probably be O.K.," Mr. Kay said. "The Gateway brand won't sink beneath the waves."

Also this month, Gateway announced plans to close its Sioux Falls, SD, U.S., facility, which could result in about 300 layoffs. Some workers will be relocated. Gateway is also expected to move its Poway, CA, U.S., headquarters about 90 miles north by the end of summer, to the neighborhood where eMachines is based. (USA TODAY )

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