Gateway Unit Acquisition Still Haunting MPC

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The acquisition of Gateway's professional services unit in 2007 has come back to bite computer assembler MPC, which filed for bankruptcy Friday.

"Unforeseen issues surrounding our integration of the Gateway Professional business unit, combined with adapting the operations of our manufacturing partner ... have proven more challenging than originally anticipated, and have contributed to extensive losses," MPC CEO John Yeros said in a statement.

MPC, originally known as Micron Computer, is a distributor of PCs in the professional business sector, including government, health care and education.

MPC acquired the professional unit of Gateway in October last year for US$90 million. The acquisition included Gateway's small, medium and large business customers, and government and education operations.

An MPC spokesman did not respond immediately to requests for comment on how the bankruptcy filing would affect its customers. However, operations will continue as MPC reorganizes, the company said.

MPC was delisted from the New York Stock Exchange Alternext on Nov. 4, due to sustained losses and a financial condition so impaired that it appeared "questionable as to whether we will be able to continue operations," according to a filing by MPC with the U.S. Securities and Exchange Commission on Oct. 27.

The company's stock was last listed as trading at $0.04 on Oct. 21. The company reported net revenue of $125.4 million for the quarter that ended June 30 and a net loss of $12.5 million, compared to a net loss of $25.3 million for the same quarter last year.

MPC was having supply chain troubles as well. Flextronics Computing Mauritius in late October notified MPC that it would not supply products or services to MPC because of the company's inability to ensure it could meet its obligations, according to a Nov. 3 filing by MPC with the SEC.

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