SACRAMENTO, California, July 16 -- Officials from NEC and Packard Bell have signed documents Tuesday merging NEC's personal computer systems operations outside of Japan with Packard Bell, a dominant player in the U.S. market for home computers. The deal, announced June 4, creates Packard Bell NEC.
The new company will generate $8 billion in annual sales and be the largest maker of PCs in the United States with combined 1995 shipments of 3.4 million machines for a 15 percent market share. Packard Bell is known as an aggressive low-cost marketer that dominates the retail-PC distribution network in the United States but suffers from a reputation for quality problems and poor customer support. Prior to the deal, it was believed to have been losing money for several quarters and turned to NEC and France's Groupe Bull in February for a $700 million infusion. The new deal gives NEC, which already owned 20 percent of Packard Bell, control over more than 40 percent of Packard Bell through a block of non-voting preferred shares. The June announcement surprised many industry trackers since it left Packard Bell co-founder Beny Alagem in charge of the new company as chairman and chief executive officer. Alagem, whose secretive style has been criticized on Wall Street, has indicated the new company will go public within two years. Packard Bell, which will keep its headquarters in Sacramento, said discussions regarding organizational and business structures are in progress. Packard Bell will get five seats on the new board while NEC and Bull get two each. 'We are moving ahead right on schedule,' said Kenjiro Nitta, chairman and CEO of NEC Technologies. 'We are in the process of developing the optimal plan for addressing each company's personnel, operational and strategic opportunities.'
