updated 2/9/2006 4:07:16 PM ET 2006-02-09T21:07:16

Wayne Inouye, the chief executive who refocused Gateway Inc. on personal computer sales, is resigning and will be temporarily replaced by Chairman Rick Snyder, the company said Thursday.

Inouye, who became CEO after Gateway’s acquisition of eMachines Inc. in 2004, left “to pursue other interests,” in the company’s words. Gateway declined to elaborate, and Inouye did not return a call to his office.

Inouye, a former Best Buy Co. executive who revived eMachines, took over a Gateway with a work force of 7,500 and slashed it to 1,800. He retreated from an ill-fated push into consumer electronics, and closed Gateway’s stores and began selling the company’s gear at Best Buy and other electronics stores.

He also led the Irvine, Calif.-based company to a profit after three straight years of losses.

Snyder praised Inouye for his work on the retail side but said Gateway struggled to sell PCs to businesses and through direct channels such as the phone and the Internet.

“It’s clear that there are a lot of positives that have gone on with the company and there are challenges,” Snyder said in a conference call with financial analysts and reporters.

Last week, Gateway reported fourth-quarter profit dropped 76 percent to $22.4 million, down from $93.9 million during the same period last year. Revenue grew 9 percent to $1.12 billion from $1.03 billion.

Inouye’s resignation, which took effect Wednesday, followed several days of “constructive dialogue” with the board of directors, Snyder said. “Basically, (Inouye) made the call,” he said.

Inouye’s severance package includes a cash payment of $720,000, or one year base salary, and health insurance for three years, according to a filing with the Securities and Exchange Commission. Gateway said Inouye will serve in an advisory role to ensure a smooth transition.

Snyder, 47, was Gateway’s president and chief operating officer in 1996 and 1997, before the company became an also-ran against Dell Inc. and Hewlett-Packard Co. He deflected questions about whether he would consider taking the CEO job permanently, which likely would require him to move from Ann Arbor, Mich.

Snyder said there were no other senior-level resignations and denied there would be a bigger role for Ted Waitt, who founded Gateway in 1985, guided it to its glory days as one of the largest PC makers in the United States and is still a major shareholder.

Gateway under Inouye has risked depending too much on retail sales, which are concentrated during the back-to-school season and winter holidays, said analyst David Daoud of IDC. The retail emphasis leaves Gateway vulnerable during the first six months of the year.

Now the company’s biggest challenge is finding a new leader, Daoud said.

“While there is no shortage of top-notch managers, finding someone with a diverse knowledge in the areas of consumer and commercial PCs and international markets may take some time,” he wrote in a note to clients.

Snyder denied that Gateway was for sale, even after one caller urged him to consider the idea.

“I appreciate your thoughts,” Snyder said. “Everybody has an obligation to look through the options ... As a practical matter, we’ll continue to operate in a normal fashion.”

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