eMachines hurt by slump in Web advertising

EMachines took steps to reduce its dependance on Internet advertisers Thursday, when the company announced a restructuring of its low-cost PC business.

Due to heavy declines in the market for Internet advertising, eMachines will reduce its use of pop-up advertisements and eliminate resources it dedicates to the company's eWare and eKeys products. Instead, eMachines plans to increase its focus on building more profitable relationships with ISPs (Internet service providers), the company said in a statement.

As part of the restructuring effort, eMachines will cut 16 percent of its workforce, or 21 positions, and close sales and development facilities in San Francisco, New York and Scotts Valley, California, the company said. As a result, the company will take a US$3.7 million restructuring charge in its first fiscal quarter.

The actions should save the company approximately $2.8 million for the year 2001, after taking into account an associated decline in revenue of about $1.6 million.

EMachines did not immediately return calls seeking comment.

The company sells low-cost PCs bundled with a variety of Internet-related services and functions. The vendor has made inroads in the market for very low cost PCs, but its business suffered during the last year. For its fourth-quarter financial results reported last month, earnings fell well below analysts' expectations. On Thursday, shares of eMachines closed at $0.25, down from a 52-week high of $9.50 reached last May.

EMachines, based in Irvine, California, can be reached at +1-714-481-2828 or http://www.e4me.com

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