Gateway, the third-biggest PC company in the US, is to close its 188 stores and cut 2,500 retail jobs, representing nearly 40 per cent of its workforce.
The decision comes less than a month after Gateway completed its US$290 million (£158 million) acquisition of eMachines, a former rival. Many eMachines executives have been brought in to replace Gateway staff.
EMachines is noted for its success at improving its previously flagging profits. The expense of maintaining stores had hindered Gateway's ability to compete.
Gateway will retain and seek to widen its direct sales operation via the Web and phone in the US and abroad.