It's Official: Gateway Buys EMachines

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Gateway completed its buy of PC vendor EMachines this week, and appointed EMachines Chief Executive Officer Wayne Inouye as its new CEO.

Gateway's purchase of the Irvine, California, EMachines was valued at over $234 million in cash and stock when the deal was announced at the end of January.

Gateway, based in Poway, California, said that the buy would increase its scale, making it the third-largest player in the U.S. PC market and eighth-largest PC vendor in the world.

Inouye succeeds Ted Waitt as Gateway's CEO, though Waitt remains chairman of the company and its largest stockholder, Gateway says.

Product Plans

The two organizations will now work on expanding their joint product lines to tap into new markets, Gateway says. The company predicted that it would return to profitability in 2005, thanks to the sales growth and cost savings it expects to receive under the buy.

Gateway's purchase of EMachines reflects a renewed focus on the company's PC business, after making an aggressive push into the consumer electronics market.

EMachines has made a strong showing in the U.S. retail channel, coming in fourth in terms of PC shipments in the fourth quarter of last year, just ahead of Gateway, according to market researcher IDC.

What's more, IDC predicted earlier this month that worldwide PC shipments would increase 11.4 percent in 2004, and 11.2 percent in 2005, making a concentration on the PC market even more attractive.

Money Matters

In other company changes, Gateway also says that it is looking for a new independent accounting firm after receiving notification from PricewaterhouseCoopers that it does not wish to stand for reappointment.

Gateway says in a statement, however, that there was no disagreement with the accounting firm "on any matter of accounting principles, financial statement disclosure or auditing scope or procedure."

The PC vendor has already faced investigation by the U.S. Securities and Exchange Commission related to its 2000 financial results.

Gateway is in advanced discussions to appoint a new accounting firm, which will have to be approved at the company's May 20 stockholders' meeting, it says.

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