Gateway to Buy EMachines for $235 Million

Associated Press | January 30, 2004 | ELLIOT SPAGAT

[HAL9000]

SAN DIEGO - Gateway Inc., hoping to reverse its sagging fortunes in the personal computer business, said Friday it would buy privately held eMachines Inc. in a deal valued at $235 million.

The combined company would create the third-largest PC company in the U.S. market _ still far behind Dell Inc. and Hewlett-Packard Co. _ and give Gateway a stronger presence in low-end computers.

"We've always struggled at the low end of the PC business," said Rod Sherwood, Gateway's chief financial officer.

The agreement came one day after Gateway posted its 12th loss in 13 quarters, a result of sharply declining sales and charges related to its makeover from a personal computer maker to consumer electronics company.

Last year, Gateway's PC shipments fell 24 percent to just under 2.1 million units.

Ted Waitt, who founded Gateway in 1985, said skepticism by analysts about the future of the company's PC business, which still accounts for about 70 percent of its revenue, "basically gets answered" by the acquisition.

Under the terms of the deal, Waitt will relinquish his role as chief executive to Wayne Inouye, who holds the same job at eMachines. Waitt will remain Gateway chairman.

Also, eMachines will get 50 million Gateway shares, valued at $204.5 million at Thursday's closing price of $4.09 on the New York Stock Exchange, and $30 million cash.

Irvine-based eMachines had revenue of $1.1 billion last year and has been profitable for nine straight quarters. The company declined to provide additional financial information.

Gateway, based in the San Diego suburb of Poway, had revenue of $3.4 billion last year. It said it expected to return to profitability in 2005.

[Only1choice____Freedom]

Will they rename the company as Packard Bell?

[areeves79]

Well eMachine used to be a good brand.......until now

[Frapster]

awww crap

[ambrose]

eMachines... they went public in the late 90's, the insiders dumped all the stock... then it dropped to pennies a share with the dotcom collapse... then one of the insiders took it private... and now they get to cash back out again.

Wow.

[ambrose]

Yup... now may be a good time to run out and get another one before they screw it up.

[stainlessbanner]

has been profitable for nine straight quarters.

Impressive in the pc industry. I've heard emach. quality is much better than a few years ago.

[dix]

Several of my friends have poop pooed the Emachine I bought three years ago for $350.00, but I have never had one wit of trouble with it.

[Poohbah]

I own an eMachine Athlon. Damn good computer. My wife wants to get another computer and hand-me-down this one to our daughter. Looks like we might have to buy it before the Gateway brand (and lack of quality) land on it.

[E. Pluribus Unum]

When a PC company starts selling flat-panel TVs, you know the end is near.

For them.

[AuthenticLiberal]

All I can say is that my better half's eMachine box is about as useful of a PC as an abicus....

[r9etb]

I've got an e-Machine, which I rather like. I did have to replace the floppy drive after about a month, but no troubles since.

Not as good as the Dell I have at work, though.

I used to have a Gateway at my office, and LOATHED it.

[Winston Smith Jr.]

When was it made? Apparently eMachines were cr@p until about 2001---but the one we bought our son for Christmas is doing fine.

[NotJustAnotherPrettyFace]

Dittos for me. I need to expand its hard drive though. Our E-machine is primarily used by the kids for homework, school papers, etc.

[tje]

I was in Circuit City a few years back, looking at an eMachine. I smelled something funny and then noticed the smoke coming out from the power supply. It burned up right before my eyes.

This was my only experience with an eMachine. As for Gateway, their boxes are cute.

[Sloth]

Gateway to Buy EMachines for $235 Million

I just bought a Dell for $558.

[Viva Le Dissention]

I've heard that Emachines are hit or miss. In the computer industry, like most anything else, you get what you pay for.

When I was computer shopping, I talked around to a few people and heard the same thing several times: for under $400, you get a fine computer. Problem is, about 1 in 4 stop functioning properly because of inferior parts.

If you don't mind paying a little less and rolling the dice, I guess it's a good deal.

[Professional Engineer]

PING

[RightField]

I just bought my second eMachine. My first is 4 years old and has never given me a speck of trouble. Am passing it on to my teenage son for homework and internet browsing. Added a CD-RW drive a couple of years ago. It was my 3rd computer, after a Packard Bell (did we ALL have to go through THAT initiation?) and a Gateway.

I just bought a new eMachine Athlon 3000 and love it. DVD-RW rom, and a lot of bells and whistles for $750.

The Gateway Pentium II is being moved to the garage for my husband to play chess on, and do some word processing.

Whatever happened to that Packard Bell ????? LOL