Thomson's IPO Helps RCA Regain Prominence
Founded in 1919, the Radio Corporation of America was the most successful maker of radio receivers, phonographs, microphones, amplifiers, and other audio electronics in the first half of the 20th century. RCA created the National Broadcasting Company and had its version of color television accepted as the national standard. The company name, synonymous with American technological prowess, was a household word until the rise of the Japanese electronics industry in the 1970s.
Dominance of the consumer electronics market by Asian companies led to the decline of the RCA brand, which in 1986 was sold to General Electric, then in 1987 spun off to France's Thomson SA, a huge conglomerate partly owned by the French government. GE, RCA, and Zenith formed the triumvirate of American electronics companies through the 1960s. Neither GE nor Zenith now has much presence in the consumer electronics field. Earlier this year, Zenith filed for bankruptcy after an ill-advised venture with Divx players.
But RCA is coming back strong. Under the leadership of Thomson Multimedia CEO Thierry Breton, RCA has closed high-cost manufacturing plants in the US and Europe, and opened production facilities in China, Poland, and Mexico. An aggressive new-product development program is underway, and Breton has arranged partnerships with heavyweight corporations like Microsoft and Hughes Electronics, which operates satellite service DirecTV.
Thomson SA has pumped almost 11 billion francs ($1.75 billion) into the resurgence of the brand, according to Evan Ramstad in the November 4 edition of the Wall Street Journal. According to Ramstad, Thomson Multimedia attained operating profitability in the first quarter of this year, ending "a string of losses that stretched for over a decade." Thomson Multimedia earned $53 million on $2.99 billion in revenue during the first six months of 1999. In addition to television sets (one of RCA's most popular product lines), the company also makes DVD players, satellite receivers, wireless telephones, and camcorders. RCA's MP3 player, the Lyra, is making strong headway in one of the audio industry's fastest-growing niches.