Gateway president and CEO Wayne Inouye has resigned to "pursue other interests."

Richard Snyder, Gateway's chairman of the board and former president and chief operating officer, will temporarily serve as CEO while the company searches for a permanent replacement. Gateway expects to complete its executive search by the end of the third quarter, according to the company.

eMachines history

Inouye's short stint at Gateway started in March of 2004, when Gateway acquired computer-maker eMachines, where Inouye had been CEO since 2001.

One of Inouye's first moves after taking the helm was to shut down Gateway's nearly 200 US retail stores that were draining money from the company. He then led Gateway to reach retail agreements with top retailers including Best Buy, Circuit City, Staples and CompUSA.

During his tenure, Inouye steered Gateway to several profitable quarters, although the company's latest earnings reported last week missed analyst expectations.

Last week, Gateway - a distant third in the US PC market behind Dell and HP - reported that its fourth-quarter net income dropped to $22.4 million from $93.9 million from the same year-ago period. Revenue was up to $1.12 billion from $1.03 billion from the same year-ago period, but was below analyst expectations of around $1.2 billion.

Challenge to retail partnerships?

Some analysts speculated whether Inouye's departure would hurt Gateway's key partnership with Best Buy.

"Gateway is heavily weighted toward placements at BestBuy, and Wayne Inouye was the guy who made that really tick," said Sam Bhavnani, principal analyst mobile electronics and computing, for Current Analysis in San Diego. In the late 90s, Inouye served as senior vice president of computer merchandising for Best Buy.

Gateway now faces the challenge of finding a leader who can maintain Inouye's momentum in the retail market and broaden Gateway's reach into other areas of opportunity, such as the commercial and international markets, said David Daoud, research manager for personal computing at market research firm IDC.

Daoud expects the first half of 2006 to be a challenging, transitional period for Gateway, as the company enters the seasonally slow time in the US retail market and embarks on its search for a new CEO.