NEC offshoot to digest Packard Bell's remains

Japanese giant creates global operation for PCs, servers

NEC has formed a subsidiary, NEC Computers International (NECC), to take over what's left of its failed Packard Bell operation. NECC will cover all of NEC's PC and server activities outside of Japan and China, with its own wholly owned subsidiaries covering specific territories.

The switch over to the new structure will take place on 1 January 2000. Michael Fromont, who's currently running Packard Bell Europe, is to run the whole shebang. Packard Bell Europe has generally done rather well for itself, with the loss-making US operation causing all the trouble. Last year, the company as a whole lost $500 million. This year, PB said it had reduced that to $150 million, but that was still not enough for NEC execs, who had imposed a $100 million target on PB's management.

Back in July, NEC president Kouji Nishigaki threatened to "sell, merge or close" Packard Bell if the company's turnaround wasn't up to spec, and that's largely what has happened over the last week or so since the restructure plan was leaked to the Wall Street Journal.

So, NEC confirmed initial reports that it is closing its US assembly plant in favour of outsourcing production, that it is attempting to sell off its US call centre as a going concern, and that the upshot of all this will be a reduction in PB's headcount of around 80 per cent. Staff were officially notified of the layoffs at the beginning of the month, but are apparently being made to work out their 60-day notice periods.

In the circumstances, we wouldn't expect them to be too productive. As anticipated, the NEC restructure will see the company shift away from PB's retail roots to more corporate-oriented markets, such as system integration and Internet services. It will also continue to offer specialist items like the executive-oriented Z1, though, as indicated by that machine's NEC brand, don't expect Packard Bell to have much of a showing any more. ®

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