Escom Computer AG, billed as Europe’s second largest personal computer retailer, is slashing its workforce by 43%, firing 1,900 of its 4,400 employees – but the jobs of the remaining 2,500 people are far from safe after the company announced that it would seek protection from its creditors under German bankruptcy law whereby a company enters composition proceedings to attempt to persuade creditors to scale back its liabilities.The company admits that it is not certain it can obtain the necessary financing from creditor banks for its reorganization. At a meeting of the supervisory board last Tuesday, which included representatives from potential new investors in the company, it became clear that talks with new investors were at a dead end. The company now plans to focus on core businesses and will close secondary stores around Europe. Escom had 1995 sales $1,580m and personal computer production was up 22% to half a million machines. Immediate cause of the crisis is that losses for 1995, originally estimated at about $83m are now thought to be close to $120m. Discounts on accounts receivable and inventory valuation adjustments increased the losses for 1995, and it has racked up further losses in the first half of this year. In the UK, where 65 stores were closed last week at a cost of 227 jobs (CI No 2,946), There will not be any further closures in Britain, but the rest of Europe is being examined, Escom told Reuter. There are still 170 stores trading in the UK, and the company has a total of 460 stores in Europe, only 132 of them in Germany, which means that the 235 in the UK, the market it knew least well, overshadowed the rest of Europe. Vobis Microcomputer AG, the other major German personal computer retailer, not surprisingly has no interest in taking over or investing in Escom; RWE Telliance AG, which was to have taken a 12% stake in Escom, is believed to have walked away after taking a closer look at the books, and even Siemens AG, Germany’s great last repository of lost causes, whose Siemens Nixdorf Inf ormationssysteme AG has 12.5% of Escom and 10% of Vobis, is unlikely to want to operate a chain of computer stores – and In the past few months there has been no significant co-operation in purchasing with Escom, it said. It therefore seems likely that every other personal computer company in Europe will simply heave a sigh of relief at seeing one less competitor in the market, and that the only hope of rescue is someone like a utility with very deep pockets, or a bank.
