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Gateway in Deal With Best Buy

The computer maker will sell excess inventory from its shuttered outlets through the retailer. Store sales of PCs is expected to follow.

June 12, 2004|Terril Yue Jones | Times Staff Writer

Computer maker Gateway Inc., which shut down its retail stores in April to stem continuing losses, said Friday that it would sell excess inventory from those stores through Best Buy Co. retail locations.

The merchandise for sale will include consumer electronics items such as home theater systems, digital music players and flat-screen televisions, but not personal computers, said Gateway spokesman Bob Sherbin.

"It's a sign that our relationship is close and getting closer," Sherbin said of Best Buy.

Gateway Chief Executive Wayne Inouye spent several years working for Best Buy. After he left the retail chain to run EMachines Inc., the company's low-priced PCs made their way onto Best Buy shelves. Inouye joined Gateway after it bought EMachines for $290 million in March.

Martin Reynolds, a hardware analyst with technology market researcher Gartner Inc., said it was unusual for Best Buy to accept "an inventory dump" from Gateway. "But it's a good deal for Best Buy, and it's a good opportunity for Gateway to work through Best Buy. After this, it will be surprising for a formal relationship between the two not to happen."

Gateway is expected to soon begin selling its PCs through Best Buy and other retail outlets such as Circuit City Stores Inc. and CompUSA Inc.

Poway, Calif.-based Gateway lost $526 million last year on sales of $3.4 billion, and has reported losses for nine consecutive quarters.

The company is aiming to shed 4,000 jobs by December, including the 2,500 it cut by closing its nationwide network of 188 retail stores.

On Friday the company said it would close its customer sales and support facility in Sioux Falls, S.D., by the end of the month, eliminating about 300 jobs.

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