Analysts believe the Piedmont International consortium has "a pretty good chance" of turning the Olivetti PC company around. But the group of Italian and foreign investors, which was formed specifically to buy Olivetti's PC arm, will need to make major restructuring moves, believe observers - although Piedmont claimed it was not planning any lay-offs.
US lawyer Edward Gottesman, head of UK holding company Centenary, the main party in Piedmont, said: "We are confident we can restore this company to a successful business." He added that "we do not foresee any lay-offs", although foreign marketing and distribution will be moved to the Netherlands. PC production will continue, for four years at least, in the current plant near Turin, which will be leased from Olivetti, while marketing and sales for the domestic market will also remain in Italy.
However, many analysts believe more serious restructuring will begin once the deal is finalised late next month. "Olivetti PC has dragged down Olivetti for years. It has to be run more efficiently and that's bound to mean cuts," said one Wall Street analyst. "That will be difficult because of the Italian unions" - who were not involved in the takeover negotiations.
Piedmont denied it was considering further IT acquisitions, or moving into other IT products. Its relationship with Olivetti will remain close - the Italian company retains a 10 per cent stake in its former PC arm, and will be its largest customer. Olivetti will still resell its PCs through its systems and services arm, which currently accounts for more than half of Olivetti PC revenues. Piedmont will also pay its partner royalties for a 20-year agreement giving it the rights to market products under the Olivetti brand, which is very powerful in Italy.
Olivetti itself will now focus its efforts on maximising profitability at its systems and services, office products and telecomms businesses in order to reduce its massive debts. Chief executive Roberto Colaninno, who has been under intense pressure from creditors to sell the PC company, said that the asset disposal plan announced in October is almost complete and has yielded better than expected results. The sale of Olivetti PC was the cornerstone of that strategy.
However, Colannino said he does not expect his company to make a profit this year. His priorities are now, he said, to streamline other computer businesses and to accelerate the transition to making telecomms the premier operation. Currently, the main revenue generator is systems and services, but its margins are under pressure and it may have to pay higher prices for PCs now that these are made by an outside supplier.
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