eMachines files for $200 million IPO

One of the most anticipated IPOs made its first formal appearance Tuesday when eMachines Inc. filed for a $200 million public offering.

eMachines didn't include a per-share price range or offering size in its filing with the U.S. Securities and Exchange Commission. The company, which has established itself as one of the largest PC sellers in less than a year, hopes to go public with the ticker symbol "EEEE", on the Nasdaq. Credit Suisse First Boston leads the underwriting team, which includes BancBoston Robertson Stephens, Hambrecht & Quist and Salomon Smith Barney.

Tuesday S-1 filing with the SEC provides the first publicly availble details about eMachines' business. The company lost $3.9 million on revenue of $351.3 million in the first six months of this year. Sales rose almost 56 percent from the first quarter to the second quarter, while gross margin fell to 2.9 percent from 4.6 percent over the same period, as eMachines offered higher rebates even as it guaranteed prices for certain retailers.

ZD Market Intelligence data indicates eMachines sold more PCs through traditional retail channels than all but two companies in June. Four retailers generated more than 70 percent of eMachines sales in the latest quarter, including more than 25 percent from Office Depot, and more than 10 percent each from Best Buy, Circuit City and Microcenter.

All of eMachines' reported sales have come from hardware, but it won't be that way for long if the company gets its way. eMachines expects to start reporting revenue from a recently announced deal with America Online, and also plans to launch its own Internet service provider, eMachines.net, in the fourth quarter of this year.

The ISP revenue could become increasingly important as an influx of cheap PCs -- a trend largely started by eMachines itself -- continues to drive computer prices lower. eMachines made a splash last year when it began offering sub-$500 PCs last fall.

eMachines keeps its prices low by subcontracting all manufacturing and technical support. Korean manufacturers TriGem Computer and Korea Data Systems, which each own more than 28 percent of eMachines, make all PCs for the company. KDS and a Taiwanese firm, Jean Co., provide all monitors.

Other large eMachines shareholders include president and CEO Stephen Dukker, who owns 8 percent, and AOL, which owns 8.7 percent.>