Packard Bell to lay off 200

The troubled PC maker trims staff at its service and support center in Magna, Utah, as part of a continuing effort to become profitable.

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Packard Bell NEC will lay off 200 employees at its service and support center in Magna, Utah, as part of a continuing effort to become profitable.

Notice was given late last week to employees that there would be job cuts in call answering, supervisory, and management positions, according to Ron Fuchs, vice president of corporate communications at Packard Bell NEC.

Employees expect to be notified this Friday if their positions are among those eliminated. The layoffs will represent approximately 22 percent of the workforce at the call center, which employs about 900 people.

"Support call volumes are down, which is being driven by improved quality, a shifting towards Web-based PC support, and self-diagnostic software shipping on our PCs," Fuchs said. "In no way does this denigrate [the] service level we provide to our customers."

The focus on efficiency has become more urgent after several years of unprofitability in Packard Bell NEC's U.S. operations. The company has lost an average of $500 million for each of the last three years, executives have said previously. Overall, NEC's global operations have also undergone a massive restructuring to stem losses totaling $1.25 billion in the last fiscal year.

Although Packard Bell pioneered the retail sales channel and was among the first companies to sell sub-$1,000 PCs, its market share in the United States has dwindled as Compaq, Hewlett-Packard, and IBM have adjusted to become more competitive in the low end of the PC market. Now, ultra-low-cost manufacturers such as Emachines are also taking customers that Packard Bell traditionally had.

Fuchs said that the company reduced costs by 42 percent last year and is on track to cut losses to around $100 million for 1999. Among other steps the company has taken to regain a competitive standing, Packard Bell NEC has cut the number of its retail partners and reduced the number of models it offers.

Recently, the company has begun to emphasize the NEC brand as part of an effort to attract high-end PC buyers. The company's new $2,500 Z1 computer features a 15-inch, flat-panel display that also houses the hard drive and processor.