Gateway to Buy EMachinesBy Jeffrey Burt | Posted 2004-01-30 Email Print
Combined company would be the third-largest PC company in the U.S. marketstill far behind Dell and HPand would give Gateway a stronger presence in low-end computers.Gateway Inc., which has spent the past year trying to expand beyond its PC-making roots, on Friday announced it was buying privately-held computer-maker eMachines Inc. for about $235 million.
Officials with Gateway, in Poway, Calif., said the combined company will create the third-largest computer maker in the country behind Hewlett-Packard Co. and Dell Inc.and eighth in the worldwith combined 2003 revenue of $4.5 billion and more than 7 percent of the U.S. PC market. EMachines, of Irvine, Calif., generated about $1.1 billion in revenue last year.
Gateway will pay $30 million and 50 million shares of stock for eMachines, and officials say they expect the deal to close in six-to-eight weeks. Gateway officials expect the deal to help it reach profitability in 2005.
During a conference call with reporters, both Waitt and Inouye touted the synergies that will be realized by combining Gateway's direct sales model with the indirect model of eMachines, which sells its products though such retail outlets as BestBuy and Circuit City. However, Waitt had to field several questions on that indirect model's impact on Gateway's own retail stores. There are no plans now to start selling eMachines products in Gateway's stores, he said.