Outsourcing = having another company make stuff for you, put your name on it, and sell it as your own
I'll cut and paste the press release.
Gateway Outlines New Fulfillment Model For Its Rapidly Growing Product Line
Previously Discussed Outsourcing Review Leads to Plan Providing
Greater Flexibility, Faster Delivery Times, Lower Costs
Measures Expected to Help Lead to $115-$130 Million in New Annualized Savings;
Transformation Expense of $120-$160 Million to be Taken in Coming Quarters
POWAY, Calif., Sept. 3 /PRNewswire-FirstCall/ -- Gateway, Inc. said today
that it is transforming the way it handles product sourcing, logistics,
support and service -- creating a more efficient platform to support its
overall transformation into a branded integrator of personalized technology
solutions.
(Logo:
http://www.newscom.com/cgi-bin/prnh/20020930/LAM050LOGO )
The new product-fulfillment model delivers on one of the company's core
transformation milestones announced at its May 8 analyst meeting and is
expected to be operational by mid-November, in time for the holiday selling
season. It is based on using strategic partners and collaborative planning
with suppliers, as well as consolidating in-house resources, to make the
company leaner and nimbler as it dramatically broadens its array of
Gateway-branded products.
The new fulfillment model, once fully implemented, is expected to lead to
$115 million to $130 million of annualized savings, above the $400 million in
previously announced spending reductions, and facilitate improved flexibility
and faster delivery times. The company expects to book related transformation
expenses of $120 million to $160 million, a portion of which will be
recognized this quarter with the balance recognized primarily in the fourth
quarter of 2003 and the first quarter of 2004.
"We have spent the past six months transforming our products, our retail
network and our marketing efforts," said Gateway chairman and chief executive
Ted Waitt. "But we're also completely re-designing our sourcing, logistics,
service and support systems to create a more efficient infrastructure as the
backbone of the new Gateway."
Combining Gateway's manufacturing and service capabilities with those of
multiple manufacturing and service partners in the U.S. and overseas will
enable it to obtain the best combination of cost and quality for PCs and
consumer electronics. It will also enhance flexibility, allowing the company
to more efficiently design, launch, sell and support the new products that its
customers demand, while allowing for more efficient management of its
traditional build-to-order and configure-to-order PC systems.
Its plan to establish regional hubs for service and shipping purposes will
quicken response time for customer orders and service, while lowering
logistics costs. The company will continue to explore other areas where
outsourcing can be successfully implemented to drive efficiency and
performance improvements.
As an initial part of this plan, Gateway will close its Hampton, Virginia
manufacturing complex on Sept. 30. While Gateway will continue to maintain a
presence in North Sioux City, South Dakota, it will reduce staffing numbers at
that location and at its Sioux Falls, South Dakota facility as certain
responsibilities shift to partners and other facilities.
About Gateway
Since its founding in 1985, Gateway (NYSE: GTW) has been a technology and
direct-marketing pioneer, using its call centers, web site and retail network
to build direct customer relationships. As it transforms itself from being a
leading PC company into a branded integrator of personalized technology
solutions, the company's line of Gateway-branded products is expanding to
include digital TVs, DLP projectors, tablet PCs and systems and networking
products and services. Gateway is America's second most admired computer
company, according to Fortune magazine(1), and its products and services
received more than 125 awards and honors last year. For more information,
visit
http://www.gateway.com .
(1) Source: Fortune magazine, March 3, 2003 issue.
Special Note
This press release contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they do not materialize or
prove incorrect, could cause Gateway's results to differ materially from those
expressed or implied by such forward-looking statements. All statements,
other than statements of historical fact, are statements that could be deemed
forward-looking statements, including any projections or preliminary estimates
of earnings, revenues, or other financial items; any statements of plans,
strategies and objectives of management for future operations; any statements
regarding proposed new products, services or developments; any statements
regarding future economic conditions or performance; statements of belief and
any statement of assumptions underlying any of the foregoing. Accordingly,
there is no assurance that transformation expenses or savings will be as
estimated, that aspects of the transformation plan other than the specific
steps announced today will be implemented, or that outsourcing agreements will
be finalized or if finalized, will operate in accordance with the company's
expectations. The risks that contribute to the uncertain nature of these
statements include, among others, competitive factors and pricing pressures,
including the impact of aggressive pricing cuts by larger competitors; general
conditions in the personal computing industry, including changes in overall
demand and average selling prices; the ability to transform the company to a
technology solutions provider and restructure its operations and cost
structure; the ability to access new technology; infrastructure requirements;
changes in accounting rules; the impact of litigation and government
regulation generally; inventory risks due to shifts in market demand; changes
in product, customer or geographic sales mix; the impact of employee
reductions and management changes and additions; and general economic
conditions, and other risks described from time to time in Gateway's
Securities and Exchange Commission periodic reports and filings. Gateway
assumes no obligation to update these forward-looking statements to reflect
events that occur or circumstances that exist after the date on which they
were made.
SOURCE Gateway, Inc.
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