EMachines Warns Slow Sales to Multiply Loss for Quarter

Bargain computer seller EMachines Inc. warned Wednesday that an industry-wide sales slump has dealt a severe blow to its holiday season results.

The Irvine company said it would lose about five times as much money as analysts had predicted for the fourth quarter--19 cents to 23 cents a share, compared to a consensus estimate of 4 cents.

The company expects revenue of $120 million to $130 million, a precipitous 58% drop from the $307 million it recorded in last year’s robust final three months.

Its battered shares declined 23% on the news, losing 9 cents to close at 31 cents in Nasdaq trading. The stock has lost 97% of its value since the company went public in March.

Executives blamed declining consumer demand, a weakening economy and a glut of inventory, the same factors dragging down its competitors. Compaq Computer Corp., Gateway Inc. and Apple Computer Inc. have issued similarly dire earnings warnings.

But for EMachines, which came from nowhere in late 1998 to emerge as the third-largest seller of desktop computers, the slowdown could have a more devastating effect.

The company has relied almost solely upon the low end of the computer market, selling models for as little as $399. Even when it was riding high during last year’s huge market expansion, it took home just 5 cents for every dollar of sales, compared to about 25 cents for its chief competitors.