Packard Bell NEC Shuts Down U.S. Consumer Operations

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Packard Bell NEC joined IBM on the scrap heap of the U.S. retail PC business today when its parent NEC ordered the company to pull out of the consumer market and cut 80% of its workforce.

NEC, along with the French firm Groupe Bull, holder of the remaining 12% of PB NEC, required that the company limit its losses to only $100 million in 1999. NEC, which owns 88% of PB NEC, made the decision to pull out after it became clear Packard Bell NEC would be unable to limit its losses this year and would post a $150 million loss. This is the third consecutive year the company was in the red, a company spokesman said, with losses in 1997 and 1998 totaling more than $1 billion.

Exactly when product will disappear from store shelves was not released.

About 2,600 employees will be affected by the decision with the majority of the layoffs taking place when the PB NEC manufacturing facility in Sacramento and customer service center in Utah are closed. A specific date for this was not released. A PB NEC spokesman said 12 of 13 senior executives would be let go. Mal Ransom, PB NEC's executive VP of marketing could not be reached for comment.

The PB NEC move comes just weeks after IBM announced it was pulling up its retail PC stakes and heading to the Internet. A PB NEC spokesman said the company might also explore this option.

PB NEC had recently made a splash with its all-in-one Z1 PC, selling under the NEC brand name, and had just rolled out its holiday season PC line.


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