Japanese conglomerate NEC has pulled the plug on its US PC maker, Packard Bell, after another year of larger than expected losses. The Packard Bell brand will disappear from US retail stores and the company also plans to close its main manufacturing facility, based at its headquarters in Sacramento, California. A total of 2,600 employees will be laid off, a cut of nearly 80 per cent. This includes most senior executives, including Alain Couder, its French chief executive who was brought over from minority stakeholder, Groupe Bull, last August. NEC is also considering selling its PCs over the web and outsourcing the manufacturing division. The layoffs do not include the NEC Computer Systems Division, which also sits under the Packard Bell mantle. It will continue to sell PCs, notebooks and other hardware and services to corporate America. The move will also not affect Europe. During the restructure of Packard Bell NEC earlier this year (PC Dealer, 24 February), the European arm of the vendor was snatched away from the US company's control. It was placed under direct control of the Japanese parent company in a $450m deal to protect the European subsidiary and inject cash into the ailing US company. A spokesman for NEC stated that a report by Dataquest released last Friday, indicated that Packard Bell NEC is in pole position for European consumer and home sales, offering some brighter news to the Japanese parent. Schelley Olhava, an analyst at IDC, added: "Packard Bell as we know it in the US has gone." Graham Hopper, managing director of Packard Bell UK, told PC Dealer: "This is why the decision was taken earlier in the year to distance the UK operation from the US one. Packard Bell's brand perception is very different in the US to the UK, and the European operation is doing very well." However, he did concede that the fate of the US operation would cast a shadow over Europe: "There is a problem in that users may not realise that Packard Bell US and UK are different operations. That may damage brand equity, but only in the short term". According to Intelect ASW PC Channel Tracking service, as recently as 1997, Packard Bell US was the number one manufacturer of PCs sold through the retail channel, claiming a 29 per cent market share. But Dataquest said its current share of the US market was a fraction of one per cent and the supplier was in sixth position in the retail PC sector. Its fall from grace came about despite NEC and Groupe Bull's investments of $2bn over the past two years. Analysts claimed Couder was under instructions from Japan to keep losses to below $100m for fiscal 1999, and when they ballooned to $150m, NEC decided that enough was enough.
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