Weitzen, who joined the company almost two years ago, has been seen as a key player in Gateway's growth trajectory. As previously reported, Waitt will continue on with the company as chairman of the board. Waitt did not say why he has decided to step down as CEO, but indicated that a transition has been underway for some time. Gateway said Waitt will continue to play an active role in helping set the company's strategic direction.
Waitt, 36, was listed by Fortune Magazine in October as the third richest American under the age of 40, with a net worth estimated at around $5.4 billion.
"Jeff's appointment to CEO is both a formalization of the roles we've essentially been playing for the last year and a recognition of the outstanding job he's done preparing Gateway for the next century," Waitt said in a statement. "We're extremely fortunate to have someone with Jeff's strategic vision and years of experience running a worldwide business."
Weitzen joined Gateway as president in January 1998. Prior to that, he spent 18 years at AT&T, with his most recent title there being executive vice president of the Business Markets Division, a $24 billion unit of the telecom giant.
Analysts agree that Weitzen is capable of managing the company.
"What Ted has done that has been instrumental in the last year is assemble a top-notch management team," Ashok Kumar, an analyst with US Bancorp Piper Jaffray, said last week when rumors swirled about the succession.
"If Ted totally distanced himself from the company, the Street would be uneasy," Kumar said. "But instead we'll have the best of both worlds."
Whether or not he is to be credited for helping turn the company around, Weitzen certainly came to Gateway at the right time.
Last January, Gateway had just recovered from financial losses in the third quarter of 1997. The stock traded in the $19 range, including a subsequent split. The company was continuing to gain market share but margins were declining. Now, the stock trades in the mid-60's. In the third quarter, Gateway grew faster than all other PC companies except Dell.
Part of the surge in growth came from an effort to broaden the customer base as well as the types of products it sold. The company, for instance, opened its Country Store outlets, which effectively gave the direct marketer a retail presence.
In addition, Gateway launched its YourWare program, which allowed it to sell additional hardware, software and ISP services to customers by emphasizing low monthly payments. YourWare has been instrumental in Gateway's continued growth, according to analysts.
And more recently, the company sewed up a massive deal with AOL under which they will invest $800 million in Gateway. The deal also provides for a cobranded online store, cooperative development on Internet appliances and comarketing deals that will lead to bundles of Gateway PCs and AOL Internet service. Weitzen served as the Gateway representative on the deal.
Last year, Weitzen took home $3.5 million in compensation, more than the compensation Waitt received. In 1998, Gateway also gave him 1 million options priced at $34. Gateway's stock split in September.