Tuesday August 31, 4:10 pm Eastern Time

PC seller eMachines files for $200 million IPO

By Peter Ramjug

WASHINGTON, Aug 31 (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 (Nasdaq:EEEE - news), 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.

 More Quotes
 and News:
                 Nasdaq:EEEE - news
                 America Online Inc (NYSE:AOL - news)
                 Best Buy Co Inc (NYSE:BBY - news)
                 Circuit City Stores Inc (NYSE:CC - news)
                 Compaq Computer Corp (NYSE:CPQ - news)
                 Office Depot Inc (NYSE:ODP - news)
 Related News Categories: IPOs, US Market News