Under pressure, Packard Bell to lay off 20 percent of staff

Margaret Kane ZDNet.co.uk

Published: 09 Oct 1998 14:31 BST

Packard Bell will lay off 20 percent of its U.S. work force by the end of the year, the company said Thursday. A division of NEC, Packard Bell said the cuts would stretch across all areas of operation, resulting in between 750 and 1,000 jobs being lost. No cuts are planned for the company's European, Latin American or Asian operations.

The cuts are part of a strategy to reduce fixed costs to return the company to profitability, the computer maker said in a release. "It is a difficult course to take, but we will emerge from it a stronger, more disciplined and more focused company," CEO Alain Couder said.

Packard Bell NEC, the No. 5 PC maker in the United States, has struggled in recent years. Once the unquestioned powerhouse of the consumer PC market, the company now faces tough competition from Compaq Computer Corp., Gateway Inc. and Dell Computer Corp. In July, NEC said it would give an additional $225m (£137m) to the company, boosting its stake to 52.81 percent.

The move followed the surprise departure of Packard Bell founder Beny Alagem earlier that month, amid rumours he had been pushed by an unhappy board.

Couder, a former chief operating officer at Groupe Bull, was named as his successor. Bull is a minority investor in Packard Bell NEC.