SACRAMENTO, Calif. -- Citing hundreds of millions of dollars in losses, Packard Bell NEC Inc. is pulling out of the U.S. market for home computers and laying off 1,400 workers by the end of the year.
The pullout closes an era of rapid U.S. decline for Packard Bell NEC, once the second largest domestic maker of personal computers but only No. 6. by this summer, according to researcher Dataquest.
Like other PC makers, Packard Bell has been hit hard by fierce price wars and rising computer parts prices. But the company also had a mixed record with customers because of computer quality problems. Its withdrawal follows IBM's decision last month to stop selling PCs in retail outlets and focus on justing selling over the Internet.
Packard Bell lost $650 million last year and couldn't sustain losses, spokesman Ron Fuchs said Tuesday.
As part of the retrenchment, Packard Bell will pull all consumer PC models from U.S. retail stores except for its $2,500 Z1 desktop, which comes equipped with built-in flat-panel screens, Fuchs said today. The company is exploring options for selling its consumer-oriented PCs over the Internet or through other channels.
The retreat is a setback for NEC, which owns 88 percent of Packard Bell NEC, and its partner, Groupe Bull of France, which held the remaining 12 percent. Both invested billions into the venture in hopes of penetrating the U.S. market.
Packard Bell will shut its Sacramento factory in a blow to the regional economy, and is in talks to sell its call center in Magna, Utah.
Sacramento Vice Mayor Jimmy Yee said Packard Bell assured city officials it would completely repay a $27 million loan that the city made to the company.
Packard Bell was seen as an economic boon for the region when it opened its facility at the former U.S. Army Depot in south Sacramento five years ago.
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