PC Seller eMachines Files For $200 Million IPO
By Peter Ramjug
WASHINGTON (Reuters) - Personal computer seller eMachines Inc., which has
sold more than one million PCs since November 1998, said Tuesday it plans to
raise $200 million in an initial public offering of common stock.
The Irvine, Calif.-based company, which has sold the third highest number of PCs through retailers in
the United States in June according to industry figures, also offers Internet access via a relationship with
America Online Inc. (NYSE:AOL - news) .
But the company plans to launch e-machines.net, a private label Internet access service, in the fourth
quarter of 1999.
The combination of growing Internet access demand and the introduction of PCs priced under $600 has
created an opportunity for the company's low-priced computing and Internet services, eMachines said.
The company said that it is able to maintain low fixed costs, capital expenditures and manufacturing
and operating costs by outsourcing most major operating and manufacturing functions.
It said it also maintains low distribution, marketing and administration costs by distributing and
advertising its products and services through a limited number of large retailers like Best Buy Co Inc.
(NYSE:BBY - news), Circuit City Stores Inc. (NYSE:CC - news) and Office Depot Inc. (NYSE:ODP -
news) .
All of eMachines' PCs and monitors are currently being made in Korea, China and Malaysia by TriGem
Computer Inc. and two other suppliers.
In July, Compaq Computer Corp. (NYSE:CPQ - news) filed a complaint in Texas against eMachines,
TriGem and another supplier charging infringement of 13 patents held by Compaq for improved system
processing speed, enhanced video graphics and overall system architecture, said eMachines, which is
currently assessing the complaint.
Located online at www.e4me.com, eMachines did not say, in its preliminary prospectus with the
Securities and Exchange Commission, how many shares are in the IPO, their projected price range or
other details.
The $200 million figure was used solely to calculate the SEC registration fee, the company said.
eMachines is expected to amend that figure and include details of the IPO in subsequent filings.
The company has applied to trade the shares on Nasdaq under the symbol, and the underwriters are
Credit Suisse First Boston, BancBoston Robertson Stephens, Hambrecht & Quist and Salomon Smith
Barney.
It plans to use the net proceeds from the offering for general corporate purposes, including working
capital and financing its Internet service rebate program for the planned e-machines.net service.
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