Jobs cuts are 'inevitable' at computer maker Gateway's operation in Clonshaugh, Co Dublin, according to Gateway's Irish boss Mike Maloney.
The news comes after Gateway announced $9 million losses last quarter on the back of slow sales of personal computers, and said it would seek to reduce its 10,000 strong global workforce.
Of particular concern for Ireland - where Gateway has its European headquarters - was the fact that European sales were down 46% on last year, compared with a 36% slump in the US.
900 people are currently employed at Gateway's Clonshaugh facility, after the company laid off 200 staff in April.
Maloney said 'huge restructuring' was planned by Gateway, but said no information on the number of job cuts would come until the end of August.
Continuing poor margins on computer sales hit second quarter earnings, losses of $9m compared with profits of $118m in the same period last year.
Mike Maloney said an imminent rebound in the US personal computer market was unlikely, and that the slow roll out of broadband technology globally was holding back the need for consumers to upgrade the computers.
Whilst Gateway was positioning itself for high speed access era, it must gear itself to weather the intervening storm, Maloney said.
Building Gateway's 'beyond the box' (or revenues from sources other than PC sales) is a key part of this strategy. However, he pointed out that with over $1 billion in cash reserves the company's financial position is not vulnerable.
Gross margin last quarter was up only a fraction at 18.7%, hit by the company's 'Gateway Guarantee' programme, in which it promised consumers competitive prices.
'In large part it's still the continued softness in the market we are serving,' Gateway's CFO Joseph Burke told analysts in a conference call last night. 'The overall US consumer PC market has declined in each of the last three quarters - that's the first time that's ever happened.'
Burke said the company would lay off workers, but declined to say how many jobs would be eliminated from its 10,000-strong US sales workforce.
