Personal computer sales have fallen

It will also shut one in three of its shops in the US as it suffers from the recent slump in PC sales and fierce competition from its larger rivals.

Dell has managed to expand its market share through an aggressive price cutting strategy, while Compaq and Hewlett Packard have merged.

Gateway has been forced to take extreme measures to cut costs and has announced three restructurings since 2000, eliminating more than half its original workforce.

Targeting TV

The latest cuts are expected to save $400m (�256m) a year and return the firm to profitability.

The US' fourth largest computer maker lost $309m last year and $1bn the previous year.

The firm confirmed that it would continue to press ahead with plans to diversify its product range to include digital televisions and video gear.

The latest cuts will leave the company with 9,300 employees.