NEC Sells Packard Bell to Calif. Investor

In what could be yet another chance at life for one of the most storied brands in the history of electronics, California investor Lap Shun Hui is about to complete the purchase of Packard Bell from Japanese manufacturer NEC, The New York Times has learned.

It started out as a radio manufacturer, and still today, some of the most handsome radio sets of the 1930s, in the display cases of antiques collectors, bear the gleaming silver name "Packard Bell" that inspired a generation of artists to try similar designs on cars of the 1950s. During the '50s, the brand became a part of Teledyne, known more in the US as a defense electronics contractor than a consumer brands leader.

By 1986, the story goes, a group of Israeli investors wanting to build a PC company bought the rights to the Packard Bell name from Teledyne, which wasn't using it. They wanted it not because of its history in radio, but because they knew consumers would confuse it with Hewlett-Packard and with the phone company.

The June 10, 1996 issue of PC Week proclaimed Packard Bell "the No. 1 PC maker in the United States, beating Compaq by several percentage points." Dataquest had projected the company with a 15 percent market share, at a time when there were far more companies in the field (today, #2 HP owns the Compaq name, and has an estimated 18.9% market share).

Three years earlier, French manufacturer Gruppe Bull purchased a 20 percent stake in Packard Bell, then set the forces in motion which would enable NEC to enter into the picture, eventually becoming a majority owner.

But Packard Bell would cede as much as eight points of market share before the end of that year, according to some estimates, casting its future in doubt. In December 1996, BusinessWeek reported the company was facing bankruptcy, due in part to a loss of public confidence. "Many experienced consumers shied away from Packard Bell," its article stated, "citing its reputation for shoddy quality and indifferent service and support."

The rumors of Packard Bell's demise would be strangely prolonged for another three years. In 1999, NEC announced it would start seeking a buyer for the brand, as it pulled its operations from the US and concentrated instead on smaller markets such as the Netherlands. Nearly seven years later, there's a deal.

There was a time when the Packard Bell name was synonymous with "entry-level," and at least in the Netherlands, if not elsewhere, that's still true. Today, PCs are still produced there, although it's also known among the Dutch as a provider of MP3 players. So after all this long time, the Packard Bell name still adorns devices that produce music.

Meanwhile, new Packard Bell owner Hui, back during the brand's glory days, along with business partner Bun Wong, were involved with a company called Korea Data Systems USA, that was the subject of a 2002 lawsuit by the US Securities and Exchange Commission.

During the mid-1990s, the SEC found, KDS manufactured and sold monitors to Mag Innovision, which were then resold in the US under that brand. But Mag was asked to make its payments to a company called Aura, which then booked the payments as revenues before transferring the money to KDS, which also booked it as revenues. The SEC accepted a settlement with KDS, the terms of which were not disclosed.

Apparently playing it straight since that time, Hui purchased the eMachines brand in 2001, and is credited with having installed the management team that brought that brand back to prominence. While eMachines later merged with Gateway, it was former Best Buy CEO Wayne Inouye -- whom Hui installed at eMachines -- who now runs Gateway.

Later, Hui made a bid for the combined company, and although that deal apparently never materialized, he reportedly remains one of Gateway's largest shareholders. Whether Hui is planning a new deal that would collect the power of the Gateway, eMachines and Packard Bell brands (assuming there's any power left in the latter) remains to be seen.

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