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Packard Bell may cut U.S. jobs

The company's domestic unit reportedly is expected to shed 1,000 workers, but a representative denies that this is planned in the near future.

Packard Bell NEC, a domestic unit of Japan's NEC, is likely to cut more than 1,000 jobs to further boost its business efficiency, according to reports.

Such a move would come on the heels of NEC's announcement last week that it would pump $300 million into the computer maker and up its investment stake to 49 percent from nearly 20 percent.

Packard Bell NEC is expected to formulate a cost-cutting plan in January that will include slashing a little more than 1,000 people from its current work force of about 6,000, Japanese business daily Nihon Keizai Shimbun said today. The layoffs would amount to a roughly 38 percent cut in the company's staff since last year, when it operated with 8,000 workers, the paper reported.

A spokeswoman for Packard Bell NEC, however, said the company has no immediate plans for layoffs.

"The company has no plans for layoffs in the near future, which can be in the next couple of months," said Debbie Thornton. "But I can't speak of the whole year."

Packard Bell NEC has been a financial disappointment to NEC, generating less revenues than expected this year as competitors horned into its markets. The company also posted a decline in third-quarter shipments while the shipments of its competitors rose, and has not turned a profit since NEC's international operations merged with Packard Bell in 1996. Despite those events, NEC still wants the company to go public next year.

The NEC unit was asked to bolster its restructuring efforts, the paper said, quoting an unnamed NEC executive who said the restructuring plan that Packard Bell NEC had drawn up in the past was "insufficient." Packard Bell NEC is comprised of a Packard Bell division that concentrates on selling computer systems to retail customers and an NEC Computer Systems division that sells to corporate customers.

"NEC has said it wants to be profitable before it goes public," Thornton said, noting there are other means of achieving profitability besides layoffs.

The new deal brings NEC's total investment in the computer maker to $1.3 billion and marks its fourth investment in the company in two years, said Luis Machuca, NEC executive vice president and general manager of NEC. Groupe Bull, a minority owner based in France, also guaranteed $20 million of the $300 million deal to Packard Bell NEC, and now will have a nearly 13 percent stake in the company.

Reuters contributed to this report.