MARKET SAVVY : EMachines Files for 1st Public Stock Offering : Technology: The Irvine-based PC maker says in SEC filing that it plans to raise $200 million.
An Irvine company that came out of nowhere to become one of the nation’s largest PC makers by selling computers for less than $600 said Tuesday that it plans to raise $200 million in an initial public stock offering.
EMachines Inc. has sold a million personal computers since it began shipments in November, and the company now accounts for one of every nine PCs sold in retail stores in the U.S. It has yet to turn a profit, however. EMachines lost $3.9 million on revenue of $351 million through the first half of this year, according to a Securities and Exchange Commission filing made Tuesday.
The company was formed last September and is primarily owned by two Korean companies, TriGem Computer and Korea Data Systems Co., which own 28.5% and 28.2%, respectively. The company got a huge boost in June from America Online Inc., the country’s largest Internet service provider, when it signed a marketing agreement in which AOL would provide rebates of up to $400 to EMachines buyers. As part of the deal, AOL took an 8.7% stake in the company.
EMachines’ filing with the Securities and Exchange Commission did not say how many shares the company plans to sell or at what price. Company officials declined to comment.
Industry experts credit EMachines’ strong start to effective planning and execution.
“EMachines is really focused on production efficiency, and they lined up their production, distribution and outsourcing relationships before anything else, making sure they were concrete before going forward,” said Matt Sargent, an analyst with InfoBeads.
EMachines farms out virtually all its operations--manufacturing, warehousing, distribution, research, product design, warranty services and customer support--leaving sales, marketing and administrative functions to its employees. At the end of June, the company had only 49 people on its payroll.
EMachines is led by Stephen A. Dukker, 46, previously senior vice president of merchandising and operations of Computer City, a subsidiary of Tandy Corp. that has since been acquired by Dallas-based CompUSA Inc.
EMachines faces litigation from two larger competitors.
Compaq Computer in July accused the company of infringing 13 patents that the Houston computer manufacturer held related to how the computers functioned. And earlier this month, Cupertino, Calif.-based Apple Computer filed a lawsuit saying that in producing its eOne computers, EMachines had stolen the exterior design of Apple’s popular iMac line.
EMachines has not yet responded to either suit.
