MPC Gateway Dead

I got so excited about Chuck Clement's gonzo eruption that I missed the really big MPC Gateway story: the bankrupt company is giving up, laying off its employees, and liquidating its assets. Uff da! Now dozens of South Dakota school districts are stuck with Gateway tablet PCs that they can't return or get warranty service on.

The company isn't treating its laid-off employees any better: Clement reports in Wednesday's print MDL that MPC says it can't meet its legal obligation to give remaining employees 60 days' notice of their termination. Of course, the company was left in a tight spot by the abrupt resignation of a big chunk of its sales force earlier in December.

Condolences for the workers are appropriate, but no tears for a business that over-promised and under-delivered. Now South Dakota can once and for all kick its misguided allegiance to Gateway, a company owed its initial success to this state and then let us down.

MPC Gateway Bankrupt

Uh oh—I hope the kids in Faulkton, Hoven, and Lake Preston have gotten their laptops. If they haven't, they might be waiting even longer: Gateway has managed to (almost) kill the company that bought it. MPC Corporation filed for Chapter 11 bankruptcy today. MPC CEO John Yeros cites "nforeseen issues surrounding our integration of the Gateway Professional business unit, combined with adapting the operations of our manufacturing partner to additional customized requirements" as "more challenging than originally anticipated."

Didn't anticipate challenges: sounds like an epitaph for countless failed businesses.

MPC's press release assures us that "The company's operations are expected to continue during the reorganization process." Hmm... kind of like Baltic, Faulkton, and several other South Dakota school districts expected to have their computers before September 1?

Maybe next year's Classroom Connections program should skip the fancy laptops and just buy the kids some books. Less tech support, longer shelf life.

Gateway/MPC Also Fails to Deliver for South Dakota High Schools

Gateway/MPC dropped the ball on DSU and lost their business; now KELO reports the company's production line woes are also leaving South Dakota high schools in the lurch:

Tardy slips are going out to many laptop computers that were supposed to be delivered to South Dakota high schools by the first day of the new school year. Instead, some school districts are still waiting for those Gateway computers. And each day without the computers is setting teachers and students further back in their class work.

Baltic was one of fifteen South Dakota school districts chosen to receive the Gateway laptops to begin the school year. Baltic was supposed to receive 175 of the computers. But today, only fifty arrived [Perry Groten, "Baltic Receives First Batch of Laptops," KELOLand.com, 2008.09.03].

At the bottom, we find the state Department of Education still running some interference for a company that has abandoned South Dakota and good service:

The state education department says some of the computers that are to be delivered to South Dakota are still on the Gateway assembly line.

The department says another reason for the delay was the uncertainty over the laptop program fueled by funding debates during this year's legislative session [Groten, 2008.09.03].

Right. Blame the South Dakota Legislature for Gateway/MPC's inability to deliver its product on time to long-standing customers. Governor Rounds announced he had the funding for the laptops in May. Schools might still have been bound by their budget rules to place orders in July, after the new fiscal year started, just like DSU.

Of course, that hasn't stopped Fujitsu from delivering to DSU in three weeks. Superintendent Sittig in Baltic: call Fujitsu!

Why DSU Dumped Gateway/MPC for Fujitsu

As reported last week, Thanks to ineptitude at Gateway/MPC, new and transfer students at DSU will not receive their Tablet PCs until (probably) next week. For details on what happened, here's this morning's e-mail from DSU's Director of Technology David Zolnowsky:

We placed our order for tablets for students and faculty upgrades with MPC in mid-July. We ordered E-295Cs for students and the bulk of faculty upgrades and a small number of E-155Cs for faculty upgrades. At the time we placed the order, we were told the 295s would ship in about 10 days and the 155s would ship in about 5 weeks. On August 8^th, we were advised that shipment of the 155s would be delayed until mid-September (because of supply problems with batteries and processors) but the 295s should arrive the third week of August. If we were willing to accept a lesser processor and a smaller battery in the 155s, they would be shipped at the same time as the 295’s. Although we could adjust plans to accommodate the arrival of the 295s in late August, we did not believe faculty would be happy with the less-powerful machine. And, we did not believe that faculty would be happy with a ship date in mid/late-September. Accordingly, we canceled the order for the MPC E-155C tablets and placed an order for an equal number of Fujitsu T1010 tablets.

On August 20^th, we were advised that production issues at the new MPC assembly plant would also delay shipment of the 295s – moving that ship date to the second or third week of September. Weighing the hassle of a new vendor against the furor of late distribution, we elected to switch vendors. Consequently, we canceled the order for E-295C tablets and ordered an equal number of T1010 tablets with expedited shipping. In essence, 10 days before the beginning of the 2008FA term we canceled our tablet order and submitted our order to a new vendor.

I was thus mistaken when I said Gateway/MPC knew about the order for a year. Still, the company managed to blow a sizable contract with a long-standing client... and several hundred students and some professors are left in the lurch. Ugh.

Acer/Gateway Never Promised...

SDPB Dakota Midday discusses the latest round of layoffs at Acer as the Taiwanese company sheds the excess labor force it inherited in its acquisition of Gateway. Paul Guggenheimer talks to Rick Hanna, equity analyst at Morningstar in Chicago, who points out that Acer never promised not to layoff anyone in North Sioux City or anyone else. Hanna says he looked back through the news coverage from the time of the Acer-Gateway deal last year. He says Acer CEO J. T. Wang never promised no lay-offs.

Sure enough, Google through the press, and there it is, a Business Week Q&A with Wang, headlined "Acer Chief Promises No Gateway Layoffs," in which Wang offers plenty of CEO-execuspeak but no promise:

[BusinessWeek] Is laying off U.S.-based workers at Gateway one way to achieve those synergies?

[Wang] People in Gateway started to think how many employees will be laid off. That's not a priority. We want to keep the business. The synergies calculated don't include laying off people. They're mainly from back-end synergies, especially for procurement of key components and possibly synergies from logistics and services. The priority is to create synergy and maintain the business. We don't want to destroy the business or scale down the business. People at Gateway should look at Acer as supporting their strength to make the business turn around [Bruce Einhorn, "Acer Chief Promises No Gateway Layoffs," BusinessWeek.com, 2007.10.29].

The Sioux City Journal reported that gobbledegook as a no-layoffs promise; having read the headlines but not the original quote from Wang, so did I. Oops. As Hanna points out on SDPB, we sometimes hear what we want to hear. And certainly the folks in North Sioux City wanted to believe that, after years of a good jobs and a good relationship with the company, the new boss's complicated words could be taken as a signal that their jobs were safe.

The moral of this story: never believe your job is safe... and never take anything a corporate CEO says as a promise.