BIGEJOE and ALL: Here is the WSJ article on NEC and Packard Bell.
June 4, 1996
NEC, Packard Bell to Merge
Personal Computer Operations
Packard Bell's Alagem to Head Firm,
Which Is Seen Going Public in 2 Years
An INTERACTIVE EDITION News Roundup
TOKYO -- Electronics giant NEC Corp. said Tuesday it
is merging its international personal-computer operations
with affiliate Packard Bell Electronics Inc. of the U.S.
A new company, Packard Bell-NEC, will begin
operations July 1, and will be responsible for PC sales
world-wide, NEC said. Financial terms of the agreement
weren't available, but first-year sales are estimated at $8
billion, with an estimated world-wide market share of
11%, NEC said.
Under the agreement, the new company will sell PCs
under the Packard Bell-NEC name except in Japan and
China. A separate Packard Bell-NEC Japan unit will be
set up, while the China operations have yet to be worked
out.
Packard Bell will hold five seats on the new company's
board of directors, with NEC and Cie. des Machines
Bull each holding two seats. NEC and France's Bull
together currently hold about 40% of Packard Bell, but
NEC wouldn't disclose the size of its stake in the new
company.
At a press conference Tuesday, NEC President Hisashi
Kaneko said the new company would be taken public in
two years. Until now, Packard Bell has been closely held.
Mr. Kaneko said the new company will merge all of
Packard Bell's operations with the PC and server
business of NEC unit NEC Technologies Inc., whose
assets are valued around $300 million. He said in return
for the transfer of assets, NEC will receive preferred
shares in the new company, but declined to put a value
on the stake.
Although the new company will be headed by Packard
Bell chairman Beny Alagem, and will be based in
Packard Bell's home of Sacramento, Calif., Mr. Alagem's
control may have limits. Mr. Alagem's "management
made the company grow rapidly," Mr. Kaneko said, but
he added that "big size needs support."
Mr. Kaneko declined to say if an NEC executive will
take an active role in managing the new company, but he
did say NEC will dispatch engineering and quality
support staff to the new company. He said it hasn't been
decided whether the two NEC board members will
reside in California.
The combination expands a long-running alliance between
Packard Bell and NEC. NEC made an initial equity
investment in 1987 in Bull HN, then a U.S. company, and
transferred the stake when Bull came under French
control in 1992. In 1993, Bull made an initial investment
in Packard Bell that now amounts to about a 20% stake.
Last summer, NEC purchased a 20% stake in Packard
Bell for $170 million. Then, in February, the three
companies set a complex deal under which Packard Bell
received a much-needed cash infusion as it acquired
Bull's Zenith Data Systems unit.
While outranked in world-wide PC sales, the two
companies combined sold more PCs than any other
company last year in the United States. Packard Bell
alone was the No. 2 seller after Compaq in the United
States last year. The company's market share slipped
during the first quarter of this year, however.
Despite its big market share, Packard Bell has had
difficulty maintaining profitability in the cut-throat PC
market. Although the company doesn't disclose its
results, it lost money in 1995, according to Thomas
Friery, the city Treasurer of Sacramento, which loaned
the company $26 million to relocate to the city in 1995
and therefore has access to its books. Packard Bell made
an estimated $44 million in 1994, following break-even
results in 1993 and a loss in each of the six years prior to
that, according to International Data Corp., a market
research firm based in Framingham, Mass.
-- end of article --
Again, please excuse the poor formating.
Regards,
Erik. |
