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O.C. BUSINESS PLUS

EMachines to Cut Staff 16%, Close Offices

Tech: Product cancellations also are among the cost-reduction measures taken in search of profits.

March 30, 2001|KAREN ALEXANDER | TIMES STAFF WRITER

Beleaguered Irvine bargain computer seller EMachines Inc. said Thursday it plans to cut 21 jobs, or 16% of its work force, close offices and eliminate some of its Internet products to cut costs.

The company said in a press release that it will take a charge of about $3.7 million in the first quarter to cover restructuring costs. It expects to save $2.8 million this year as a result of the moves, after taking into account a drop of about $1.6 million in revenue associated with the restructuring.

The company will close sales and development offices in San Francisco, Scotts Valley and New York.

EMachines hopes to reduce its exposure to the ailing Internet advertising market. It will eliminate resources supporting its Internet products, such as eWare, eKeys and pop-up advertising, to focus on more profitable Internet service provider products, the company said in a press release.

Company officials did not return calls seeking comment. Chief Executive Wayne R. Inouye said in the press release that EMachines is taking "aggressive cost-reduction measures" to refocus operations and to try to become profitable.

"We are in the process of reexamining all aspects of our business," he said.

The struggling computer vendor lost $221.4 million last year as sales slumped 17% to $684.1 million.

The press release was issued after the markets closed for the day. The company's stock lost 3 cents to close at 25 cents a share on Nasdaq.

On Tuesday, EMachines said it was notified by Nasdaq that its stock could be removed from the national market system for failing to meet Nasdaq's minimum $1 bid price requirement. The stock has closed daily below $1 a share since early November.

EMachines said it is appealing the possible delisting and that its shares will continue to trade on the Nasdaq market pending the outcome of the appeal. A hearing date has not been set yet.

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