Gateway investors want board seats

[administrator]

update A group of Gateway investors on Wednesday called on the company to appoint three of the group's representatives to its board of directors and to remove obstacles to its potential sale.

Firebrand Partners and Harbinger Capital Partners are seeking to increase their role and influence in the struggling computer maker's future. Last August, the investor group, which holds a 10.7 percent stake in Gateway, requested that the company's management meet with their representative.

But despite the discussions, the investor group remains concerned and seeks more action.

"We are troubled that the board appears to lack the sense of urgency to address the company's challenges and capitalize on its opportunities," Scott Galloway, managing member of Firebrand, stated in a letter to Gateway Chief Executive Ed Coleman and Chairman Richard Snyder. "We believe that continued inertia at the board level is unacceptable."

The letter, contained in a U.S. Securities and Exchange Commission filing, noted that while Gateway has a great brand and strength in the distribution channel, it has manages to have only a 5.5 percent gross profit margin.

"If, working together, we cannot leverage these assets, then they should be put in the hands of an organization that can," Galloway wrote in his letter. He noted that such action would entail the company's sale.

The investor group is proposing that Gateway's directors appoint three Firebrand representatives to serve on the board, redeem the company's "poison pill"--which can act as a deterrent to unsolicited buyout offers--and change the election cycle of directors to a one-year term rather than the current three-year term.

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