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Emachines joins warnings chorus

The company, which specializes in cheap PCs, says that sales in the fourth quarter will trail those from a year ago and that its loss will be greater than previously expected.

\ Emachines became the latest computer maker to warn of lower fourth-quarter earnings, saying Wednesday that sales for the period will trail those from a year ago and that its loss will be greater than previously expected.

The Irvine, Calif.-based company, which specializes in cheap PCs, said it expects to lose 19 cents to 23 cents per share, before amortization and other charges, on revenue in the range of $120 million to $130 million.

A consensus of analysts expected the company to lose 4 cents per share, according to First Call/Thomson Financial.

The news from Emachines comes after virtually the entire PC industry has warned of lower-than-expected sales. Among those that have issued warnings are Gateway, Apple Computer, Compaq Computer, Intel and Microsoft.

Emachines was one of the first to sound the alarm about the health of the PC industry. In October, the company said it would reduce production in anticipation of a 20 percent year-over-year decrease in fourth-quarter retail sales across the entire PC industry.

The company had hoped to offset slower U.S. sales with increased business from the United Kingdom. However, even back in October, Emachines said it was expecting its sales to be somewhat below those of last year's fourth quarter.

"Recent data from retailers and market research firms indicates continued uncertainty regarding when this negative buying trend will level and a general expectation that the PC market may not recover until late (in the second quarter of) 2001 due to economic uncertainties which may further influence future consumer spending trends," the company said in a statement Wednesday.

Emachines said additional promotions beyond its usual mail-in-rebates will account for part of the losses. This move could increase chances of a PC price war. The 2-year-old company also said it hopes to return to "historic" sales levels by the third quarter of next year with hopes that the 2001 holiday season will have a more traditional sales boost.

In late-morning trading Wednesday, shares of Emachines, already a penny stock on the Nasdaq, fell 6 cents, or nearly 15 percent, to 34 cents.