Sometimes cheap isn't cheap enough.
found out Friday that it is much more successful in selling its inexpensive Internet-access computer than in luring investors to buy its seemingly reasonably priced stock.
Shares of eMachines fell 3/4, or 8%, to close at 8 1/4 in its first day of trading amid concerns that the company might not be able to maintain its lead in the market for cheap Internet-oriented computers.
eMachines, which set out to challenge more established computer makers like
, sold 20 million shares in its initial public offering at $9 a share, raising $180 million.
The Irvine, Calif.-based company has seen explosive growth in demand for its stripped-down, Internet-ready computers. But while the company has tried to portray itself as a maker of Internet appliances rather than personal computers, analysts and investors have been wary of giving their full blessing to what they see as a small player in the low-margin cutthroat PC business.
The company posted revenue of $815.5 million in 1999, and $58.3 million in the four months that followed its September 1998 startup. eMachines has sold about 2 million computers since its startup.
But the strong 1999 sales, which included revenues resulting from its acquisition of
, resulted in a net loss of $84.5 million in 1999.
eMachines dropped FreePC's strategy of giving customers hardware in exchange for signing an Internet-service contract, but has relied heavily on FreePC's expertise in marketing.
Despite Wall Street's weak reception for eMachines' stock, other new issues fared well Friday.
(SLAB:Nasdaq), a maker of integrated circuits for wired and wireless communications devices, opened at more than double its $31 opening price, and closed at 69 3/8, up 124%,or 38 3/8. Web consulting business
(EPRS:Nasdaq) also debuted Friday and rose 68%, or 10 1/4, to close at 25 1/4.
As originally published, this story contained an error. Please see
Corrections and Clarifications.