NEC and Packard Bell in deal to create the no. 4 PC maker

Article Abstract:

Packard Bell Electronics plans to merge with NEC's PC operations outside Japan and China to create Packard Bell NEC, which could become the world's fourth-largest PC vendor. The new company will be headed by Packard Bell Chmn and CEO Beny Alagem, who will retain his titles and will control five seats on the board. In return for $300 million in assets, NEC receives non-voting preferred shares. These shares, combined with NEC's previous holdings, would give NEC a more than 40% stake in the new company if it went public, which Alagem plans to do by 1998. The deal is designed to give Packard Bell, which dominates the home market, a presence in the government and corporate market segments. For its part, NEC seeks to strengthen its US presence, since its success to date has been limited to its home market of Japan. Calculating from 1995 figures, Packard Bell NEC would hold 15.1% of the US market and, in conjunction with NEC, would hold 11.4% of the global market.

Management

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NEC raising its Packard Bell stake to 49%

Article Abstract:

NEC invests $300 million in Packard Bell NEC, a move that will help the latter prepare itself for a public offering. The investment gives NEC a 49% interest in Packard Bell NEC, up from the 20% stake it held before the Dec 1997 deal. NEC first put money into Packard Bell in 1995, as the former tried to establish itself in the US market. Packard Bell NEC is the third largest computer seller in the world, but its market share was eroded in 1997 by direct sales from Dell Computer and Compaq. At the same time, its profits foundered as competition forced price cuts and computers costing less than $1,000 came to market. Best known for retail sales to consumers, Packard Bell NEC seeks to enter the corporate market, for which it will need to improve its direct sales force. Some say that Packard Bell suffers from a confusing product line-up, since its corporate products use the NEC name.

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AST is in talks with Samsung

Article Abstract:

AST Research is in talks with Samsung Electronics Co about the possibility of Samsung investing in a significant minority interest in AST and the potential for strategic business alliances. Analysts say that AST could use an investment from a company such as Samsung because AST has been losing money lately and an investment from a financially secure company like Samsung could help AST remain competitive in the PC market. AT&T and HP have been gradually taking market share from AST. AST lost $22.3 million or 69 cents per share in the 2nd qtr ending Dec 31, 1994, and its short term debt increased to $75 million. AST is attempting to reduce operating costs by closing some manufacturing facilities and is planning an overall reduction of its workforce of 10% before Jun 1995.

AST Research Inc., ASTA, Samsung Electronics America Inc.

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