THOMSON MAPS 3-TIER RESTRUCTURING PLAN
12/29/97
Audio Week
Warren Publishing, Inc.
(Copyright 1997 by Warren Publishing, Inc.)
Restructuring of French govt.-owned Thomson Multimedia (TMM) will follow course charted in 3-tiered plan that's fueled by govt.'s recent capital infusion now valued at $2.2 billion. James Meyer, exec. vp-COO of Indianapolis-based Thomson Consumer Electronics (TCE), said goals for TMM in coming year include reestablishing financial credibility through profitability, reengineering basic processes, creating plan for future that includes seeking strategic partners for investment. Last item, he said, would enable French govt. to "divest a major share" in TMM. One-time $2.2 billion plug from French govt. has enabled TMM to cut debt to nearly zero, Meyer told reporters Dec. 13 at annual ProScan line showing in Sanibel, Fla. Interest alone had been $150 million annually, he said. Although cash now is used to service debt, TMM executive board has option to apply it to acquisitions or investment in technology, Meyer said. Company will seek partnerships in key components, multimedia and digital areas, he said, with at least one to occur next year. Company hopes to see 1/3 of future revenue come from digital services as result of such partnerships, he said. Thomson plans follow "stressful" 1997 in which the company implemented largest cost reduction in its history, Meyer said. "It was a difficult year from a revenue standpoint" for TCE, he said, citing DSS as one area hard hit by price cutting in competitive retail market. At same time, company ended year with $100 million additional savings beyond projections, which Meyer attributed to improved productivity and yields, lower duty and factory costs. Figure, he said, doesn't include staff reductions. Restructuring changes in business processes will be "much more difficult than closing a factory," Meyer said, because it involves overhaul of logistics. TCE hopes to slash business costs 15%-20% in 1998. Cuts won't involve R&D, digital technology or information systems, he said, but will entail about 100 "involuntary layoffs" beyond 225 employees who accepted recent job-buyout plan. Among other restructuring, TCE will close TV warehouse in Harrisburg and move operation to El Paso, across Rio Grande from company's new plant in Juarez, Mexico. Reductions in business costs will be offset somewhat by $30-million investment in digital TV over 1998, Meyer said. "We're investing in the infrastructure," he said, "and we'll be placing a major emphasis on information systems and a major realignment of the sales force. We need to make progress and it's not going to come from revenue growth." * * * * * Second-generation DVD player with component-video output will highlight 1998 Thomson ProScan line that also includes VCR for remote activation of new DSS receiver with home automation feature introduced in RCA set-top earlier this year. New Matsushita-made DVD player (model PS8610P, $749) is first Thomson source unit to include component-video output -- and possible harbinger of things to come because none of new ProScan sets or other Thomson TVs have component input. Earlier this year company told us it would incorporate component-video with forthcoming line of TV/PC monitors from its Multimedia Div. Meanwhile, all new ProScan receivers have 2 S-video jacks that company touts as yielding "perfect display for any digital input." In past, Thomson engineers have said company believes S-video connection has sufficient video fidelity for future DTV-to-NTSC converters, and most logical next step is digital IEEE-1394 connector. Since then, it has said it won't offer analog component-video input on TVs until industry adopts single connector standard from variety of incompatible hookups now in use among several brands, including Panasonic, Samsung, Sharp, Sony, Toshiba. New ProScan line will make CES debut after 70 weeks of tooling following 2 rejections by consumer focus groups. Revised cosmetics include front-tapered cabinets with top-mount controls and side-panel convenience jack pack; dark-nickel finish on source units; new classical Roman-style logo font throughout. Styling strives to combine functionality with "classicism and elegance," said Martin Marotti, mgr.-industrial design. He said "global esthetic" might enable Thomson to adopt same cosmetics for worldwide markets and achieve further operating economies. |
