Emachines cuts jobs, retrenches

Discount-computer seller Emachines will cut 16 percent of its work force and pull back its efforts aimed at getting revenue from online advertising.

Emachines, which has been among the harder hit companies in the PC sales slowdown, said Thursday it will sharply cut back its effort to sell ads and its Ekeys, which are buttons on the Emachines keyboard that link directly to Web sites.

"Emachines is taking aggressive cost-reduction measures to better align our business focus and operating expenses with our goals towards profitability, and the challenging market conditions and global economic outlook,'' CEO Wayne Inouye said in a statement.

Inouye, a former Best Buy executive, replaced Stephen Dukker as CEO in a shake-up last month.

The Irvine, Calif.-based company said it will take a restructuring charge of about $3.7 million in the first quarter. That includes the cost of cutting 21 jobs from its Internet business unit and the closure of the company's sales and development offices in San Francisco, Scotts Valley, Calif., and New York City. The moves should save Emachines $2.8 million this year, the company said, after accounting for what it expects will be a $1.6 million reduction in revenue.

Emachines also named former Canon and Epson executive Yasuhiro Tsubota to its board of directors. Tsubota, previously CEO of Canon Computer Systems and president of Epson America, now serves as an adviser to Seiko Instruments America.

Emachines has been struggling as retail sales continue to plummet. According to PC Data, U.S. retail sales of desktop computers in January fell 26 percent in units and 28 percent in dollars compared with the same period last year. Emachines took one of the biggest hits in January, with sales down 50 percent year over year.