Gateway has been struggling a great deal lately in sales of PCs, meanwhile EMachines sales have been increasing as they have been innovating and being agressive with releasing new products ahead of the curve. Gateway, looking for the strength of revenue generated by EMachines in the retail channel, has decided to buy EMachines in a $200 million deal.
Gateway CEO Ted Waitt will give up his title to Wayne Inouye, the CEO of EMachines. The deal involves the swap of 50 million shares of Gateway stock and $30 million in cash. Gateway stock has been down of late due to their struggling sales in the PC arena, but at a price of $4.09 at the close of market on Thursday the total deal comes to about $234 million.
EMachines latest 64-bit Notebook – the M6807
Gateway will sell EMachines computers only through 3rd party retail channels, they will not sell EMachine branded notebooks or PCs via Gateway.com, their traditional point of sale for consumers. Gateway also hopes to build on the retail strength EMachines already has by offering consumer electronics products into third-party retail stores. Gateway has been making a strong move into the consumer electronics market by selling LCD/Plasma TVs and digital cameras and they intend to sell these products in stores where EMachines are currently sold.
With this deal in place, Gateway expects to reach profit by 2005.