NEC to take charge of Euro subsidiary

Hardware Japanese manufacturer to face biggest loss in its history.

NEC has bought the European arm of Packard Bell/NEC from itsistory. loss-making US parent, as part of a bid to turn around its financial misfortunes, after an earlier restructure of the US subsidiary failed to keep losses in check.

The Japanese company will pay $450 million to take full control of the European Packard Bell/NEC operation. As part of a global re-structure, up to 15,000 jobs worldwide are expected to be lost over the next three years.

According to a statement issued by the company, Packard Bell/NEC Europe will develop NEC PC operations worldwide, reporting directly to Japan.

The US arm will oversee business in the Americas.

Details of the reorganisation come in the wake of the vendor being forced to disclose that NEC will be hit with the biggest loss in its history for the year ending 31 March. For the year to March, NEC made a Y150 billion loss, having forecast a Y35 billion loss. Hisashi Kaneko, president of NEC, resigned following the announcement.

Packard Bell/NEC conceded a larger-than-expected operating loss of $500 million in 1998 against a loss of $487 million in the previous year. A loss of $138 million had been projected for the year. Turnover fell 28 per cent to $2.8 billion in the year, from $3.9 billion.

Graeme Simon, director of Packard Bell/NEC UK's commercial division, rejected the claim that integrating the buoyant European unit into the struggling Japanese parent would adversely affect the subsidiary's profitability.

'It's a logical extension of the previous strategy which puts the company on a stronger footing. The link to Japan means a shorter reporting chain that will give us faster access to new technology.'

Simon also claimed there would be no job losses in Europe to his knowledge.

About 9,000 jobs will be cut in Japan and 6,000 elsewhere. Packard Bell/NEC in the US lost 3,000 following the restructure in August when NEC took over control of the unit.