NEC: $285 million more for Packard Bell

The Japanese electronics giant will invest an additional $285 million in Packard Bell to ramp up direct sales plans.

3 min read
NEC will invest an additional $285 million in Packard Bell NEC to crank up plans to sell directly to customers.

The latest round of investment takes NEC's total investment in the U.S. firm to $1.04 billion.

The funding will be used to support the NEC Now program and company infrastructure, and to expand service, support, and manufacturing, said Mal Ransom, senior vice president of marketing for Packard Bell NEC.

NEC's investment will give it as much as a 40 percent stake in the company. But it will continue to only hold a 19.9 percent voting position in Packard, because the shares it is receiving are non-voting redeemable preferred stock in the company.

The NEC Now program is designed to give business customers the option of buying directly from Packard Bell NEC. Customers can "integrate" direct purchases with service and support from NEC resellers to reduce the disadvantages of the direct sales model.

Meanwhile, Japan's top personal computer makers announced plans Monday to boost production to grab a larger share of the booming worldwide computer market.

Toshiba and NEC, already major vendors worldwide, said they aim to boost those sales, while Fujitsu and Sony said they will make a big push to gain international market share.

The global PC market is expected to grow by 18 percent to 83 million units before March 31, Japan's fiscal year, while the Japan market should see year-on-year growth of 25 percent to nine million units, said Mami Indo, an analyst at Daiwa Institute of Research.

"Japan's PC makers are getting down to work now that their brand names have come to be widely recognized in the United States and Europe, especially Toshiba and NEC,'' she added.

Toshiba was the only Japanese company in the top five for worldwide computer sales in the first quarter of this calendar year. It held less than 5 percent of the market.

The leader, U.S. company Compaq Computer, had 11.1 percent of the market. IBM was second, followed by Dell Computer. Packard Bell NEC was fourth.

Sony, which is famous for personal electronics, not computers, said its overseas strategy would center on making PCs which can be easily combined with its other gadgets.

"We plan to produce PCs for home use. Our aim is to make computers that can be easily connected to other electronic equipment, such as digital movies and still cameras. This would add value to the products,'' a Sony spokesman said.

The spokesman did not reveal any production targets.

Toshiba, the top seller of portable computers worldwide, said it would increase its total PC output to four million units in fiscal 1997-98, up nearly 50 percent from a year earlier. Boosting output will be an additional supply of motherboards coming from a new plant in the Philippines.

Slightly more than three million of those computers would be assembled at U.S. and German plants for sale overseas, with the rest made in Japan mainly for the domestic market, the company said.

"It is more efficient to have plants close to each market, as it enables PC makers to know their market, as well as to cut costs,'' Indo said.

NEC dominates the Japanese PC market with a 40 percent share.

Reuters contributed to this report.