ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, June 5, 1996 TAG: 9606050044
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
Packard Bell Electronics Inc. has acquired the personal computer operations of NEC Corp. outside of Japan for $300 million, broadening its customer base and prospects for future growth.
The combination, announced Tuesday, had been expected since February, when NEC backed Packard Bell's purchase of Zenith Data Systems Inc.
However, industry observers had expected NEC, one of Japan's biggest electronics firms with $41 billion in annual sales, to swallow Packard Bell.
Instead, Packard Bell will take control of NEC's non-domestic operations and Packard Bell's chief executive, Beny Alagem, will lead the combined firm.
``I'm surprised by the fact it seems NEC is going to offload its operations to Packard Bell,'' said Bill Zinsmeister, analyst at International Data Corp. in Framingham, Mass. ``To me, it's one incremental step as part of NEC's increasing control over Packard Bell.''
The deal potentially doubles NEC's stake in Packard Bell, to around 40 percent, for less than it has paid for its current stake.
The combination will return Packard Bell to the top of PC sales in the United States, where it was for most of last year, and gives it a much stronger international presence.
The combined firm, to be called Packard Bell NEC, will have about $8 billion in annual sales and be the world's fourth-largest PC maker after Compaq Computer Corp., International Business Machines Corp. and Apple Computer Inc.
From its start in 1987, Sacramento, Calif.-based Packard Bell has concentrated on selling PCs to consumers rather than businesses. It grew huge as home use of computers exploded in the early 1990s and it maintained lower pricing than competitors.
But that price strategy meant slimmer profits and, after an attempt to go public failed three years ago, Packard Bell has turned to outside investors for financial help to sustain its growth.
``The merger between NEC and Packard Bell enhances our financial structure but, more than that, allows us to expand to new segments that we did not participate in before,'' Alagem said at a news conference.
NEC sells PCs to corporations and through wholesalers, an important niche Packard Bell has not reached previously. Zenith Data Systems has a sizable business with government agencies and last month won part of a $1 billion contract to sell new PCs to the military.
LENGTH: Short : 50 linesby CNB