Gateway continues to shed staff, announcing plans to lose an additional 1,500 workers – 40 per cent of staff – yesterday.

This follows the closure of Gateway's 188 retail stores earlier this month. That action resulted in 2,500 job cuts. These cuts "should not affect customer service," said Gateway.

The company reported a first-quarter loss of $166 million, compared with $200 million in the year-earlier period. First-quarter revenue was up to $868 million from $844 million a year earlier, helped by the acquisition of low-cost PC maker eMachines.

As it continues a process of simplifying its organization, Gateway said it plans to further reduce its ranks from about 3,500 employees now to about 2,000 by the end of the year. The announcement of the job cuts followed the closure of Gateway's 188 retail stores earlier this month. That action resulted in 2,500 job cuts.

The company has been struggling for the last few years against larger rivals including Dell and HP. The company is betting on an increased presence in the retail channel, a higher level of efficiency and new products such as flat-screen TVs to turn its business around.

Gateway sold 604,000 PCs in the first quarter, up 19 per cent year-on-year largely due to the eMachines acquisition. Gateway products are sold primarily in the US, with some sales in Canada and Mexico. eMachines sells its products in North America as well as in the UK and Japan. eMachines is also expanding elsewhere in Europe, a spokesman said.