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eMachines Not Fazed By Port Strike, Slow Market

The combination of tough PC market conditions and the West Coast dock strike made for a difficult business environment during the past three months, but eMachines executives feel the company is set to perform quite well going into the holiday selling season.

The port strike forced eMachines to tell retailers for the first time that it could not guarantee delivery of promised inventory, which led to retailers pulling the company off ads for several weeks, said Gary Elasser, the company’s technology and platform development VP.

“The port strike was a tough test that we don’t want to go through again, but we got lucky and have since filled up our inventory,” Elasser said, adding that despite not being included in the weekly circulars, eMachines still managed to empty out its product pipeline.

Although eMachines believes the worst is now behind them, there are still some residual effects from the strike — namely a shortage of containers in Asia.

Elasser expressed some concern about Hewlett-Packard, Gateway and Dell attempting to enter the lower-price points where eMachines makes its living. But he thought these companies would have a tough time turning a profit on a $399 PC. One trick eMachines competitors are trying is to price a particular unit very low, but then try their best to upsell the customer to a higher-priced model.

Despite any potential labor problems, eMachines expects to ship between 500,000 and 600,000 units during the fourth quarter, a 20 percent increase from the same period last year.

Elasser gave a few hints on eMachines 2003 product road map, saying the company will follow through on its long-standing promise to introduce notebook computers. He also said there is a strong possibility it will start selling LCD monitors.

“The LCD monitor business next year should be extremely strong. There is talk of [LCD screens] coming down in price to $10 per inch from $14 now,” Elasser said.