Lower Portable Prices Mean Gateway Faces a Challenging Future

0

The computer business is brutal ask Gateway Inc.


Just after the Irvine-based PC maker cut its sales and profit guidance for the year, market researcher Gartner Inc. said it expects worldwide PC revenue in 2005 to reach $202.7 billion, flat with last year.


The reason: falling prices for portable computers.


While that’s been a consistent theme for desktop PCs, things haven’t been as bad for portables. In fact, robust sales and stable prices have been a buoy for the sector of the business over the past couple of years.


For Gateway, the road could be tough in the short term. With rivals such as Irvine-based Toshiba America Information Systems Inc., part of Japan’s Toshiba Corp., and Dell Inc. of Texas posting strong market share, Gateway has its work cut out in portables.


Gateway lowered its sales and profit guidance for the year earlier this month, citing competition and delays resolving tax issues.


The company said it now expects sales of $3.9 billion to $4 billion for the year, down from $4 billion to $4.25 billion it earlier expected. Gateway could earn $45 million for the year, down from an earlier profit expectation of about $59 million.


Chief Executive Wayne Inouye came to power after Gateway’s acquisition last year of low-cost computer seller eMachines of Irvine. Inouye, a former Best Buy Co. executive, is looking to adopt eMachines’ lean model at Gateway.


And while the company might have seen competition eat at its profits during the past quarter, Inouye, with his background in retail PC sales, might be able to make up for that with higher volume, edging out other store-shelf rivals.



Reprints


Newport Beach-based Acacia Research Corp., a technology licensing company that files patent infringement lawsuits over its many designs, has acquired patents for several technologies relating to improving print image quality for inkjet printers.


The $141 million company is not afraid to go after industry leaders in its “licensing and enforcement campaigns.” It won a settlement last month with Sony Corp., ending a patent-infringement lawsuit covering audio/video enhancement and image resolution technology. (The sum of the settlement was not disclosed.)


In April, Acacia filed patent infringement suits against Intel Corp. and Texas Instruments Corp. relating to microprocessors and other chips. Could inkjet printer-makers be next?


Leaders in the market include Palo Alto-based Hewlett-Packard Co., maker of the HP Photosmart line of printers, and Long Beach-based Epson America Inc., maker of the Epson Stylus Photo printers. Epson is a subsidiary of Seiko Corp., based in Tokyo.



Movie Phone


Showing there’s more to cell phones than fun and games, Jamdat Mobile Inc. just named Sony Pictures Entertainment Chairman and Chief Executive Michael Lynton to its board, effective Sept. 1.


Lynton is in charge of the movie, television and digital production arm of Sony Corp., and mobile game maker Jamdat clearly has designs to expand in that direction. Lynton is the first entertainment executive to join Jamdat’s small board, which also includes eBay Inc. Chief Financial Officer Rajiv Dutta, former Activision Inc. Executive Vice President Mitch Lasky, and private equity/venture capitalists J. William Gurley of Benchmark Capital Partners and Paul Vais of Apax Partners. Jamdat’s stock lost almost 30 percent of its value last month falling from $29.49 to $21.01 when it lowered expectations for the current third quarter.



*Staff reporter Hilary Potkewitz and Orange County Business Journal reporter Andrew Simons contributed to this column. Potkewitz can be reached at (323) 549 5225 ext. 226, or by e-mail at

[email protected]

.

No posts to display