Huge Computer Deal With Soviets Appears to Falter
Phoenix Group International Inc.’s deal to sell up to 6 million computers to the Soviet Union, touted as a landmark in East-West trade when it was announced eight months ago, appears to be going up in smoke.
Two key executives involved in the deal have left the Irvine-based company, and several former Phoenix Group officials said they believe that the venture is dead. As of last month, the company had not yet shipped its first order of 770 computers to the Soviet Union.
Netcom Research Inc., the Phoenix Group subsidiary that was supposed to be the main supplier of computers to the Soviets, is so strapped for cash that last month it laid off five of its 23 workers, former employees said. The Phoenix Group’s stock price, which closed Friday at $1.125, has declined by more than half since its peak last September.
Phoenix Group officials could not be reached for comment Friday.
The company, a technology investment firm headed by former Western Digital Corp. Chairman Charles W. Missler, rose to national prominence last September after Soviet officials called a New York press conference to announce that Phoenix would supply 6 million personal computers to Soviet schools, factories and offices.
Through a joint venture with the Soviet State Committee for Public Education--dubbed Samcom--Phoenix was to set up a computer factory in Pensa, an industrial town about 370 miles southeast of Moscow.
The announcement was greeted with much skepticism by trade specialists, who questioned why the Soviets had chosen a little-known firm with virtually no experience in building personal computers. But Phoenix Group officials insisted that they had pulled off a major coup, boasting that they had beaten out 16 competitors, including such industry giants as IBM Corp.
The first serious blow to Phoenix Group’s ambitious plans came last December with the unannounced departure of two top executives, Peter C. M. S. von Braun and St. George Tucker Grinnan III. Von Braun, named vice chairman and deputy chief executive of Phoenix Group in March, 1989, was a key architect of the Soviet computer deal.
Von Braun, a Greenwich, Conn., management consultant, said in a telephone interview that his departure from Phoenix was amicable and spurred only by a desire to pursue other interests.
