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Amiga Update (1994-08-08)
940808 Rumors and such {This line added when newsletter was archived.}
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// Amiga Update - News and Rumors //
\X/ (A Very Occasional Newsletter) \X/
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The following story was picked up from GEnie on Friday. This morning, I
became aware of rumors stating Commodore UK has won the bidding war for
Commodore International's assets, also on Friday. There has been absolutely
no confirmation of this, but if true it's very good news. Today's rumors
from the Internet also talk about GVP personnel working with Commodore
UK (now Commodore for the Whole World?) to do cost reduction, with an eye
to lower priced models in time for the Christmas buying season. Target
price supposedly about 50% of current prices. There is also NO confirmation
of this rumor. We'll be keeping our ears and modems alert, and passing what
we hear on to you.
Brad
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Time Runs Short for Liquidators to Salvage Commodore, Maker of Amiga Computer
By Dan Stets, Chicago Tribune Knight-Ridder/Tribune Business News
[reprinted {to GEnie public download area} with permission]
Jul. 30--Time is running out in the race to salvage the remains of Commodore
International Ltd., the once mighty manufacturer of small computers that had
its North American headquarters in West Chester.
Since Commodore announced its bankruptcy in April, liquidators appointed by
the Bahamian Supreme Court have been struggling both to meet the demands of
creditors and to evaluate buyout proposals.
"The urgency arises because we are dealing with an asset which is
perishable," said Franklyn Wilson, a liquidator in the Bahamas, where
Commodore was registered.
"It is an industry where change is the greatest constant. This technology
needs to be constantly updated to stay current," Wilson said. He hopes to
arrange a sale by the end of August.
The future is grim for Commodore if Wilson doesn't achieve his goal, said
David Pleasance, leader of the managers of Commodore's United Kingdom
subsidiary who want to buy the company's assets. His group's financing is
contingent on getting computers to market by Christmas, and any further delay
would jeopardize that, he said.
Commodore was once a legend in the business, bringing computers into
households around the world by selling 17 million Commodore 64s in the early
1980s.
The company had problems bringing more sophisticated computers to market in
time to compete with the growing popularity - and declining prices - of IBM's
PC and its clones, as well as Apple's Macintosh.
Nonetheless, more than 3.5 million of Commodore's Amigas have been sold, and
many Amiga lovers complain that besides poor marketing, the chief mistake
with the Amiga was that it was ahead of its time.
The advanced Amigas have video and multimedia capabilities that Apple and IBM
have not yet been able to match at comparable prices.
At this point, Commodore's legacy appears to be three distinct product lines
with different markets and potential:
- The low-end Amiga 1200, popular in Europe as an inexpensive home computer.
- The high-end Amiga 4000s. with multimedia and video capabilities still
unmatched.
- Its much-regarded technology for set-top control boxes for interactive
television.
Wilson said his greatest achievement to date had been to get the engineers
still remaining at Commodore to stay put at least until he had a chance to
sell the company. That way, any buyer would be able to get up and running
quickly.
About 20 engineers remain at Commodore's engineering headquarters, which is
now in Norristown, where all of its remaining Pennsylvania operations have
moved.
Since April, the company has been bleeding talent. One beneficiary has been
the Norwegian-based Scala, which specializes in video and software products
for cable television.
Scala's Exton office has picked up at least nine former Commodore engineers,
including Jeff Porter, former head of product development.
However, the liquidators' principal obstacle so far has been Commodore's
creditors, led by Prudential Life Insurance Co. of America of Newark, N.J.;
Anchor National Life Insurance Co., of Los Angeles, and Daewoo Corp., of
Korea, which together are owed $48 million. Commodore's combined debt and
contingent liabilities total $145 million.
The creditors are concerned that bankruptcy law in the Bahamas gives them
only an advisory role. In the United States, where they would have more say,
they have failed to establish bankruptcy proceedings.
To assuage the creditors, the Bahamian liquidators have launched two
investigations, both to be conducted by the accounting firm Deloitte &
Touche. A principal aim is to determine the value of Commodore's intellectual
property.
The liquidators are partners in Deloitte & Touche. Paul L. Adderly, their
attorney, said the fair market value of Commodore already was pretty well-
known because the company's executives had been trying to sell it for months
before bankruptcy.
He expressed concern that delays might make the company less valuable. "It
seems to me the creditors are cutting off their nose to spite their face,"
said Adderly.
Stephen M. Richmond, a Boston lawyer representing the creditors, said "a very
delicate balance" had to be struck in the case of technology companies such
as Commodore between the need to sell off the assets as quickly as possible
and the requirement to determine adequately their fair market value.
"We want to be sure that we don't have a Chippendale in our attic," said
Richmond.
The only parties with firm proposals for what may turn out to be that
Chippendale are Commodore's U.K. management team and Samsung Electronics of
South Korea, which wants to buy the intellectual-property rights to
Commodore's products but is otherwise uninterested in its inventory or other
products.
Both Amstrad PLC of the United Kingdom and Philips Electronics of the
Netherlands are said to have lost interest, at least in part because of the
legal delays.
A newcomer on the scene is Creative Equipment International, of Miami, known
as CEI, which plans to submit a bid this week.
"There is a pent-up demand for the product," CEI president Alex Amor said. "I
think it can be very successful if it is brought back to market."
His company was the largest distributor of Commodore's Amiga computers in
North America, selling $25 million worth a year, before Commodore filed to
liquidate on May 2.
If successful, he said CEI would keep all of its engineering staff in the
Philadelphia area, but would manufacture the machines overseas, most likely
in Europe.
Pleasance, leader of the UK team, said he already had manufacturing sites
lined up in the United Kingdom and would start ordering supplies as soon as
the liquidators decide.
What Samsung wants to do is not clear. Repeated attempts to contact the
company were unsuccessful.
However a deal is structured, "I think Deloitte & Touche better do something
quick, or it will all go into the ether never to be seen again," said
ex-employee Porter.
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|| Brad Webb - available at:
// Commodore has fallen || webb@malamute.med.ge.com
\X/ and it can't get up || GEnie -- B.Webb
|| Portal -- Jumpdisk
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