July 1, 1998 5:10 PM PDT

Packard Bell names new chief

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Packard Bell NEC has appointed a successor to chairman, president, and chief executive officer Beny Alagem, who said today he was resigning from the company to pursue other interests.

Alain Couder, 52, the former COO of Groupe Bull, was named chairman of the board of directors' executive committee of Packard Bell NEC. Pending resolution of visa issues, he will be named CEO of Packard Bell, the computer maker said in a press conference today.

Alagem's resignation comes amid a fall in sales that started in 1996. Packard Bell saw its market share, the total number of units sold, and the average selling price for its PCs decline in the first quarter of 1998, said Roger Kay, computer analyst with International Data Corporation.

Although the company has been plagued by a reputation for low quality, the real reason behind Packard Bell's problems has been competition. Major vendors such as Compaq Computer began to invade the retail market in earnest after Packard Bell's stunning sales in that market in 1995.

The executive departure came as a surprise to Packard Bell. Alagem is retiring, sources said, because of health problems. He suffered a heart attack last September.

In a phone interview with NEWS.COM, Alagem said he is resigning because of a fundamental clash between Packard Bell's original executives, major shareholders NEC, and Groupe Bull.

Groupe Bull bought a minority share in Packard Bell in 1993 and in 1995 NEC purchased a stake that gave it the right to add its name to the company. While the investments brought sorely needed capital, they saddled Packard Bell with a massive integration problem that never was fully completed.

"I can define it mainly as a certain disagreement over the direction and future of the company," he said. "It is a clash of cultures. You have the French members, and the Japanese members, and us."

Alagem declined to elaborate about the disagreement, but he seemed to indicate that problems arose in the company's efforts to move beyond its consumer roots and start attacking the commercial market.

The move into the commercial arena, he said, required "heavy investment" as well as cost write-downs. Alagem acknowledged, however, that there was progress in the new market.

Packard Bell's consumer division, he pointed out, is on the verge of turning a profit at a time when other manufacturers are losing money in that market, or merely are breaking even. The company also recently has begun an effort to move its price points even lower.

Interestingly, Couder's experience, unlike Alagem's, lies primarily in the commercial computing realm.

"The shareholders have now reached a decision, so the time is right for me to find a new challenge," Alagem said in prepared statement.

He said that NEC and Groupe Bull asked him to remain chairman of the personal computer maker, but he decided he would be happier in his own venture. He also noted that he and his cofounders will retain 25 percent of the company's shares.

While Alagem and the company said that they have been piecing together a new senior management team for the past few months, the resignation--or at least the timing of it--came as a surprise. Other sources said that health problems may have contributed to Alagem's decision to resign, as he has suffered heart problems since September.

While it is premature to assess how effective Couder will be, the French executive certainly will have his work cut out for him, especially when it comes to building sales, said Mike McGuire, an analyst Dataquest.

"It's not going to be impossible, but in terms of the PC side of the house, it is a fractious industry," he said. On a bright note, he pointed out that notebook sales from NEC computer systems have been tracking up during recent months.

McGuire added that Couder will have to tackle a number of questions in terms of strategy, such as whether the company can move into the profitable workstation arena and how it will change its direct sales program. Also, Couder will have to decide whether Packard Bell will combine its commercial and consumer divisions more closely, a decision for which Couder's experience in the commercial side could become an asset.

 

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