EEEE looking great After Hours
eMachines Reports Record First Quarter Revenues and Profit
Results Highlighted by 82% Revenue Increase,
Strong PC Operations, & Strong Internet Growth
IRVINE, Calif., April 27 /PRNewswire/ -- eMachines, Inc. (Nasdaq: EEEE), today reported record first quarter revenue of $249.8 million for the quarter ended April 1, 2000, an 82 percent increase over the $137.4 million recorded in the first quarter of 1999. Net income for the quarter, before amortization of intangible assets and non-cash stock-based compensation and accretion of mandatorily-redeemable preferred stock to redemption value was $737 thousand or a profit of $0.01 per diluted share, compared to a loss of $831 thousand or $(0.01) per share in the year-earlier period.
In March 2000, eMachines successfully raised $180 million before offering costs and fees from the completion of an initial public offering of common stock. eMachines' strong cash position of $303.1 million, essentially debt free, at the end of the quarter will provide the foundation for the company's continued growth, development and strategic opportunities.
130% Internet Revenue Growth over Fourth Quarter 1999 - Initiation of
Multiple Advertising Partnerships
Quarterly Internet-related revenues rose to $3.4 million in the first quarter of 2000 at a gross margin of 90 percent from $1.5 million in the fourth quarter of 1999, as we began significant deployment of our Internet strategy following the completion of our acquisition of Free-PC in January 2000. Internet revenues are derived from: ISP sign-up bounties from AOL and Compuserve, monthly fees charged to customers of our own ISP service (e-machines.net), placement and advertising fees charged to marketing partners who purchase premium positions on our new Internet-enhanced keyboards, Internet surfing assistant software and the PC desktop itself, and email offers sent to users who have agreed to receive them.
During the Quarter, eMachines signed advertising partnerships with a variety of leading web content, community and e-commerce companies including (but not limited to) eBay, ESPN.com, ABC News.com, X:drive, ThinkLink, PayMyBills.com, USA Bancshares.com, iChoose, Save.com, Boxer Jam.com, FortuneCity.com, GoTo.com, TD Waterhouse, Travelocity, Rocket Radio and DeltaThree, among others. Our keyboard inventory has been sold for the next quarter, and we have developed a backlog of transactions for software preloads and other advertising properties. Email, e-machines.net, AOL bounties and eWare opportunities developed consistent with our expectations during the quarter.
Strong PC Segment
PC revenues accounted for $246.4 million in sales with a gross margin of 4.7 percent. Unit shipments increased to 521,000 units, an increase of 82 percent above prior year. Our average gross selling price increased 15 percent to $566 in the first quarter of 2000 from $492 in the first quarter of 1999, as a result of the continuing success of our eMonster high- performance PC and eSlate notebooks, which combined now represent approximately 27 percent of total dollar sales. According to both IDC and Dataquest, eMachines has now risen to number five in North American PC unit sales across all channels of distribution (including direct and corporate sales) surpassing both IBM and Apple in total PC units output. eMachines also maintained the number three position in US PC retail sales which it has held since June of 1999, according to multiple market research sources.
"This marks our second consecutive quarter generating a profit for the business before amortization of intangible assets associated with our acquisition of Free-PC and other non-cash charges, but including interest income," said Stephen A. Dukker, president and chief executive officer of eMachines, Inc. "Additionally, we have more than doubled Internet revenues over the fourth quarter of 1999, as we completed the integration of Free-PC, and as our 'hardware portal' services and advertising revenues have begun to come on-line."
About eMachines, Inc.
eMachines, Inc. (Nasdaq: EEEE) is a leading provider of Internet-enhanced, low-cost, high-value, personal computers, and of Internet advertising, portal and software distribution services. Founded in September 1998, eMachines began selling its low-cost 'eTower' desktop computers in November 1998. In June 1999, eMachines sold the third highest number of PCs through retailers in the United States, according to leading market research organizations, and has maintained the number three market share position since that time.
In January of 1999, eMachines acquired Free-PC, Inc., an innovator in the field of delivering advertiser-supported Internet products and services. Since inception, eMachines has shipped over 2.5 million PCs through leading national retailers, catalog and online merchandisers. Approximately one of every two eMachines' consumers is a first-time PC owner, using the eMachine as their principal Internet access device. The company's Web site is located at e4me.com .
This press release contains forward-looking statements relating to future events and results that are based on eMachines, Inc.'s current expectations. These statements relate to the outlook and prospects for eMachines and the markets in which it operates. These statements involve risks and uncertainties including, without limitation, the level of demand for eMachines' products and services, eMachines' and its suppliers' ability to timely develop, deliver, and support new and existing products and services, the cost and availability of key product components, eMachines' ability to successfully develop and market its Internet-based services, and competitive pressures relating to price reductions, new product introductions by third parties, and technological innovations. Consequently, actual events and results in future periods may differ materially from those currently expected. Additional information regarding the factors that may affect the Company's future performance is included in the public reports that eMachines files with the Securities and Exchange Commission.
eMachines, Inc.
Statements of Operations
Quarters ended April 1, 2000 and March 31, 1999
(in thousands, except share information)
Quarter Ended Quarter Ended
April 1, 2000 March 31, 1999
(unaudited) (unaudited)
Net revenues:
Hardware $246,443 $137,434
Internet 3,397 --
Net revenues 249,840 137,434
Cost of revenues:
Hardware 234,979 131,101
Internet 353 --
Cost of revenues 235,332 131,101
Gross Profit 14,508 6,333
Operating expenses:
Sales and marketing
(includes $22 of non-cash stock-based
compensation in 2000) 6,060 2,719
Product development 512 --
Services and operations 313 --
Customer service and technical support 3,775 949
General and administrative
(includes $69 and $41 of non-cash stock-based
compensation in 2000 and 1999, respectively) 5,101 1,147
Amortization of intangible assets 10,196 --
Total operating expenses 25,957 4,815
Income (loss) from operations (11,449) 1,518
Interest income (expense), net 1,899 (2,390)
Net loss (9,550) (872)
Accretion of mandatorily redeemable
preferred stock to redemption value (2,346) --
Net loss attributable to
common stockholders ($11,896) ($872)
Net loss per share attributable
to common stockholders:
Basic and diluted ($0.13) ($0.02)
Shares used in computing earnings:
Basic and diluted 88,216,680 57,600,000
Supplementary information:
Reconciliation from net loss
attributable to common stockholders to
net income (loss) before amortization
of intangible assets, non-cash stock-based
compensation and accretion of mandatorily
redeemable preferred stock to redemption value:
Net loss attributable to
common stockholders ($11,896) ($872)
Amortization of intangible assets 10,196 --
Non-cash stock-based compensation 91 41
Accretion of mandatorily redeemable
preferred stock to redemption value 2,346 --
Net income (loss) before amortization
of intangible assets, non-cash
stock-based compensation and accretion
of mandatorily redeemable preferred
stock to redemption value: $737 ($831)
Net income (loss) per share before
amortization of intangible assets, non-cash
stock-based compensation and accretion of
mandatorily redeemable preferred stock
to redemption value:
Basic $0.01 ($0.01)
Diluted $0.01 ($0.01)
Shares used in computing earnings:
Basic 88,216,680 57,600,000
Diluted 126,050,426 57,600,000
eMachines, Inc.
Balance Sheets
April 1, 2000 and December 31, 1999
(in thousands, except share information)
April 1, 2000 Dec. 31, 1999
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $303,105 $114,823
Short-term investments -- 19,897
Accounts receivable, less
allowances ($3,168 and $2,160 at
April 1, 2000 and December 31, 1999,
respectively) 119,795 123,726
Inventories 68,934 65,260
Prepaid and other current assets 4,389 3,992
Total current assets 496,223 327,698
Property and equipment, net 2,736 1,827
Intangible assets 136,630 --
Other assets 8,258 2,188
643,847 $331,713
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Trade payables-related party $122,466 $131,935
Accounts payable 11,479 12,939
Accrued rebates 30,429 22,803
Accrued expenses and other
current liabilities 28,392 19,855
Total current liabilities 192,766 187,532
Deferred revenue - noncurrent portion 2,050 1,343
Subordinated notes
payable to stockholders 560 560
Redeemable convertible preferred stock
- Series A; $.01 par value; 25,000,000
shares authorized; 24,279,369 shares
outstanding at December 31, 1999 -- 150,014
Stockholders' equity (deficiency):
Preferred stock, $.01 par value;
25,000,000 shares authorized; no
shares issued and outstanding
Common stock, $.0000125 par value;
250,000,000 shares authorized;
144,864,342 and 78,019,538 shares
outstanding at April 1,
2000 and December 31, 1999 2 1
Additional paid-in capital 474,592 6,582
Unearned stock compensation (1,458) (1,550)
Notes receivable from stockholders (500) (500)
Accumulated deficit (24,165) (12,269)
Total stockholders' equity (deficiency) 448,471 (7,736)
643,847 $331,713
SOURCE eMachines, Inc.
CO: eMachines, Inc.
ST: California
IN: CPR
SU: ERN
04/27/2000 16:04 EDT prnewswire.com |
